Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Jan 15, 2021

National Storage Mechanism | Additional information

RNS Number : 7784L

Sequoia Economic Infra Inc Fd Ld

15 January 2021

15 January 2021

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 101.65 pence per share from the prior month's NAV of 100.27 pence per share, representing an increase of 1.38 pence per share.

The gain in asset valuations this month can be attributed primarily to the increase in valuation of several sizeable Company positions that have seen material credit improvements and outperformed expectations.

A full attribution of the changes in the NAV per share is as follows:

	pence per share
November NAV	100.27
Interest income, net of expenses	0.74
FX movements, net of hedges	-0.14
Increase in asset valuations	0.78
December NAV	101.65

Update on the effects of COVID-19 on the Portfolio

The Investment Adviser, the Investment Manager, and PWC, the independent valuation agent, have continued their close analysis of the effects of COVID-19 on the Company's portfolio which includes a market benchmarking exercise to conclude on spread and yield adjustments for each of the investments. The Investment Adviser is also closely monitoring the Company's assets that have not been performing as expected.

Broadly speaking, the spread widening across the portfolio during the second half of March 2020 continued its reversal throughout December, with several of the Company's investments performing better than expectations despite the various governmental COVID-19 induced restrictions in various countries. Spread tightening driven by credit improvements was evident across various sectors in the portfolio which resulted in uplifts to valuations of the relevant assets.

Further Portfolio update

As at 31 December 2020, the Company had cash of £102.6m and had drawn £149.0m on its £280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at £158.3m. The Company's invested portfolio comprised of 63 private debt investments and 11 infrastructure bonds across 8 sectors and 27 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 9.3% and a cash yield of 5.7%. Based on the Investment Adviser's analysis of our current portfolio we continue to believe that our annual dividend remains fully cash covered, net of all expenses. The weighted average portfolio life is approximately 4.1 years. Private debt investments represented 95% of the total portfolio and 63% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 97.3% of par. Investments which are pre-operational represented 8.4% of total assets.

The Company's invested portfolio remains geographically diverse with 48% located across the US, 15% in the UK, 31% in Europe, and 6% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has selectively invested in opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.

At month end, approximately 98.0% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover margin calls on its hedging book.

The Company's settled investment activities during December include:

·      A €76.1m primary loan in Madrid Metro, financing 4 SPVs that lease rolling stock to the Madrid Metro;

·      An €18.0m primary investment in Ziton Wind Entreprise's bonds, an offshore wind turbine maintenance company located in Denmark;

·      An additional $25m investment in Tracy Hills, a residential infrastructure project in California;

·      An additional $0.4m disbursement to Bourzou Equity, a company created for a data center in Virginia.

The Company's investments that were sold or prepaid in December include:

·      A $45m sale of General Electric's 5% perpetual bonds, a diversified industrial conglomerate.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Cash-on-cash yield (%)	Yield to maturity / worst (%)
Madrid Metro	EUR	Private	HoldCo	68.2	Transport assets	Rolling stock	1.30	5.40
AP Wireless Junior	EUR	Private	Mezz	62.1	TMT	Telecom towers	4.25	6.25
Tracy Hills TL 2025	USD	Private	Senior	56.1	Other	Residential infra.	8.15	8.15
Hawaiki Mezzanine Loan	USD	Private	Mezz	55.0	TMT	Undersea cable	8.55	9.56
Warnow Tunnel Tranches	EUR	Private	Senior	52.5	Transport	Road	1.37	2.26
Expedient Data Centers	USD	Private	Senior	47.0	TMT	Data centers	5.68	5.85
Care4U Senior Secured	EUR	Private	Senior	45.3	Accom.	Health care	6.50	6.50
Euroports 2nd Lien 2026	EUR	Private	Mezz	45.3	Transport	Port	7.81	7.92
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.2	Transport	Ferries	0.00	9.13
Bannister Senior Secured	GBP	Private	Senior	42.1	Accom.	Health care	6.58	6.78
Adani Abbot HoldCo	AUD	Private	HoldCo	42.1	Transport	Port	5.76	15.33
Hawkeye Solar HoldCo	USD	Private	HoldCo	39.9	Renewables	Solar & wind	8.25	8.25
Ziton Senior Secured 2022	EUR	Private	Senior	38.9	Transport assets	Specialist shipping	8.86	14.95
Jetpeaks HoldCo 2027	USD	Private	HoldCo	38.6	Power	Electricity generation	7.49	8.02
Terra-Gen Power TL B	USD	Private	Senior	38.6	Renewables	Solar & wind	5.31	6.55

Note (1) - excluding accrued interest

The Company's monthly investor report and additional portfolio disclosure will be made available at http://www.seqifund.com/.

LEI: 2138006OW12FQHJ6PX91

For further information please contact:

Sequoia Investment Management Company                              +44 (0)20 7079 0480

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Anurag Gupta

Jefferies International Limited                                                       +44 (0)20 7029 8000

Gaudi le Roux

Neil Winward

Tulchan Communications (Financial PR)                                    +44 (0)20 7353 4200

Martin Pengelley

Elizabeth Snow

Laura Marshall

Praxis Fund Services Limited (Company Secretary)               +44 (0) 1481 755530

Matt Falla

Katrina Rowe                                                                                       

About Sequoia Economic Infrastructure Income Fund Limited

The Company seeks to provide investors with regular, sustained, long-term distributions and capital appreciation from a diversified portfolio of senior and subordinated economic infrastructure debt investments. The Company is advised by Sequoia Investment Management Company Limited.

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