NAV and Investment Update

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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