Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Oct 14, 2021

National Storage Mechanism | Additional information

RNS Number : 0045P

Sequoia Economic Infra Inc Fd Ld

14 October 2021

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES

14th October 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 102.94 pence per share from the prior

month's NAV of 102.09 pence per share, representing an increase of 0.85 pence per share. A full attribution of the changes in the NAV per share is as follows:

	pence per share
August NAV	102.09
Interest income, net of expenses	0.69
FX movements, net of hedges	0.11
Increase in asset valuations	0.05
September NAV	102.94

Portfolio update

As at 30 September, the Company had cash of £111.9m and had drawn £90.2m on its £280m revolving credit facility. The Company also had undrawn commitments on existing investments collectively valued at £39.6m. The Company's invested portfolio comprised of 63 private debt investments and 11 infrastructure bonds across 8 sectors and 31 sub-sectors. It had an annualised yield-to-maturity (or yield-to‑worst in the case of callable bonds) of 8.6% and a cash yield of 5.9%. The weighted average portfolio life is approximately 4.3 years. Private debt investments represented 95% of the total portfolio and 50% of the portfolio comprised floating rate assets. Investments which are pre-operational represented 10% of total assets. The Company's invested portfolio remains geographically diverse with 48% located across the US, 19% in the UK, 28% in Europe, and 5% 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 99% 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 Investment Adviser, the Investment Manager, and PWC, the independent valuation agent continue to observe the previously identified uplift in valuations of the assets where COVID-19 has impacted performance to materialise. This trend is expected to persist as economies continue to recover and countries further open up on the back of their vaccination programmes.

Overall, the portfolio continues to perform well. As economies re-open, a number of under‑performing assets in the transport sector especially have seen significant improvements in their revenues. In addition, the Talen Energy bonds, which fell sharply last month, have partially recovered. For example, the Talen 10.5% 2026 bonds are up nearly 20% over the course of September. Given the recent media commentary around the UK energy market, SEQI has been in active dialogue with Bulb Energy Limited ("Bulb"). The drawn portion of SEQI's loan to Bulb is £55.0 million (approximately 2.9% of NAV). The loan is structured as senior ranking debt, secured on all the assets of Bulb, and accounts for all the senior ranking debt of Bulb. In the opinion of the Investment Adviser, the value of these assets exceeds the drawn loan amount. SEQI continues to actively engage with Bulb Energy Limited on an ongoing basis. Our investment in Salt Lake Potash (1.9% of NAV) is currently seeking further funding by means of an equity issue to address additional cost and ramp up requirements at their potash project. The investment advisor is actively engaging with the company on contingency plans in the event that the funding gap not be fully addressed.

The Company's settled investment activities during September include:

·      An additional $35.0m to Brightline, a privately owned passenger rail project in Florida;

·      A $50m loan to Perc HoldCo, to finance the acquisition of energy efficiency assets linked to steel production at two steel mills in the USA.

The following assets sold or prepaid in September:

·      A full sale of £12.1m of Heathrow 2027 bonds, a UK Airport;

·      A partial £5.0m sale of American Shipping Company (AMSC) 2025 bonds, a US-based tanker company;

·      A partial £6.0m sale of Navigator Holdings 2025, a US-based specialist shipping company;

·      A $31.5 primary loan to Sunrun Hera, a US-based manufacturer of solar energy equipment;

·      Heathrow 2027, AMSC 2025 and Navigator Holdings 2025 were sold to mitigate any breach to our fixed-to-floating rate ratio.

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	66.9	Transport assets	Rolling stock	1.30	5.40
Infinis Energy	GBP	Private	Senior	65.0	Renewables	Landfill gas	5.00	5.00
AP Wireless Junior	EUR	Private	Mezz	60.9	TMT	Telecom towers	4.22	6.13
Hawaiki Mezzanine Loan	USD	Private	Mezz	56.6	TMT	Undersea cable	8.35	9.05
Hawkeye Solar HoldCo	USD	Private	HoldCo	56.1	Renewables	Solar & wind	8.05	7.84
Bannister Senior Secured	GBP	Private	Senior	55.5	Accommodation	Health care	6.57	6.57
Tracy Hills TL 2025	USD	Private	Senior	54.7	Other	Residential infra	8.08	8.08
Bulb Senior TL 2022	GBP	Private	Senior	52.6	Utility	Electricity supply	6.89	10.41
Brightline	USD	Private	Senior	52.0	Transport	Rail	8.00	8.00
AP Wireless US Holdco	USD	Private	HoldCo	51.4	TMT	Telecom towers	6.00	6.00
Expedient Data Centers	USD	Private	Senior	47.8	TMT	Data centers	5.56	5.74
Sacramento Data Centre	USD	Private	Senior	45.3	TMT	Data centers	6.98	6.95
Scandlines Mezzanine	EUR	Private	HoldCo	45.2	Transport	Ferries	0.00	9.23
Euroports 2nd Lien 2026	EUR	Private	Mezz	43.8	Transport	Port	7.76	7.73
Care4U Senior Secured	EUR	Private	Senior	43.5	Accommodation	Health care	6.00	6.00

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

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

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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