18 April 2017
Sequoia Economic Infrastructure Income Fund Limited
Net Asset Value as at 31 March 2017 and Investment Update
Ordinary Share update
During March, the Company had invested or committed to invest a total of £69.5m which resulted in the total invested portfolio representing approximately 98.5% of the Company's NAV as of the 31st March 2017.
The portfolio held 30 private debt investments and 15 infrastructure bonds for a total of 45 investments that covered 8 sectors and 25 subsectors, and are collectively valued at £600.3m including accrued interest with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.3% and a weighted average life across the acquired portfolio of approximately 4.6 years. The weighted average purchase price of the Company's acquired investments was approximately 96.3% of par.
As of the 31st March 2017, the Company had gross leverage of £40m which has been drawn and partially deployed, and represents approximately 6.5% of NAV. In the four months following the December Placing, the Company has deployed approximately £140m, or 111%, of the £126m gross proceeds plus part of the leverage facility. The Company is confident in its ability to deploy capital and continues to see an attractive pipeline of opportunities.
Approximately 49.8% of the invested portfolio comprises floating rate assets, with only two LIBOR floors above current LIBOR levels (both of which are EUR). As such, the portfolio's yield is likely to rise over time as LIBOR increases.
The investments are across the UK, Western Europe, Australia, Canada and the US and include a wide range of asset types including road, rail, utility, power, shipping, renewables, aircraft and ship leasing. Of the Company's acquired investments, only 12% had some form of construction risk as of the 31st March 2017.
The Company's investment activities during March include:
· A direct origination for a £32.7m junior debt facility for Cory Riverside Holdings, a UK-based residual waste-to-energy company;
· A bilateral loan of €6.8m for the construction of a Dutch student housing building in Leiden, of which €3.1m was drawn at close, and an additional €0.7m was added to the sponsor's other student housing transaction in The Hague;
· The purchase of $15.0m of 7.0% 2024 bonds issued by Cheniere Corpus Christi, a key LNG export terminal that is currently under construction;
· A $10.0m investment of NRG Energy Inc 6.625% 2027 bonds, which is in addition to the current holding of NRG's 7.25% 2026 bonds.
· An incremental investment £5.0m of NGG Finance's 5.625% 2073 bonds
Sterling rallied significantly at the end of March against both the Euro and the Dollar, ending the month at €1.1778 and $1.255 respectively. As of the 31st March 2017, approximately 80.0% of NAV consisted of either Sterling assets or was hedged into Sterling.
The decrease in SEQI's NAV to 102.72p per share from 102.88p in February 2017 arose primarily through:
· Interest income net of expenses of 0.41p;
· A decrease of 0.05p in asset valuations; and
· A decrease of 0.52p from FX movements.
The Investment Adviser notes that approximately -0.38p of the -0.52p FX movement is attributable to a discrepancy between the valuation of the FX hedging book which is undertaken at close of business in London, and the valuation of the Company's portfolio which uses rates as at the close of business in New York. Given Sterling's rally after close of business in London, there was a technical reduction (for valuation purposes) of the Company's net assets which would reconcile with the hedges the following trading day.
Ordinary Portfolio Summary (15 largest settled investments)
Transaction name |
Currency |
Type |
Ranking |
Value £m(1) |
Sector |
Sub-sector |
Yield to maturity / worst (%) |
|
|
|
|
|
|
|
|
A'lienor S.A.S. (A65) |
EUR |
Private |
Senior |
37.1 |
Transport |
Road |
3.56 |
AP Wireless Infrastructure |
GBP |
Private |
Senior |
32.8 |
TMT |
Towers |
12.49 |
Cory Riverside |
GBP |
Private |
HoldCo |
32.6 |
Utilities |
Waste to Energy |
8.59 |
IO Data Centers LLC |
USD |
Private |
Senior |
29.9 |
TMT |
Data Centers |
9.00 |
Beamish HoldCo 2017 |
GBP |
Private |
Senior |
29.9 |
Accommodation |
Health Care |
11.39 |
Abteen Ventures |
USD |
Private |
Senior |
27.9 |
TMT |
Data Centers |
8.00 |
Regard Group Mezzanine |
GBP |
Private |
Mezz |
23.3 |
Accommodation |
Health Care |
12.12 |
Natgasoline Senior Unsecured |
USD |
Private |
Mezz |
20.9 |
Other |
Industrial Infrastructure |
9.99 |
Exeltium Mezzanine |
EUR |
Private |
Mezz |
18.7 |
Power |
PPA |
9.40 |
Welcome Break No.1 Ltd |
GBP |
Private |
Mezz |
18.3 |
Transport |
Motorway Services |
8.35 |
NGG Finance 5.625% 2073 |
GBP |
Public |
Mezz |
16.6 |
Utilities |
Electricity Distribution |
4.03 |
Neoen Production |
EUR |
Private |
HoldCo |
16.0 |
Renewables |
Solar & Wind |
6.99 |
Bristow Group 6.25% 2022 |
USD |
Public |
Mezz |
15.5 |
Transport Assets |
Aircraft |
10.91
|
Danaos Snr Secured 2018 |
USD |
Private |
Senior |
14.4 |
Transport Assets |
Shipping |
15.94 |
Alinta Energy TL B |
USD |
Private |
Senior |
13.4 |
Utilities |
Elec Supply |
6.73
|
Note (1) - excluding accrued interest
Market Summary
March was another active month in the infrastructure finance space, with over 57 transactions reaching financial close across the US and Western Europe. One transaction of note was the $890m development financing of the 1050 MW CPV Fairview Energy Center in Pennsylvania which will be a natural gas and ethane-fuelled combined-cycle electric generating station.
The Company's monthly investor report and additional portfolio disclosure will be made available at http://www.seqifund.com/.
Sequoia Investment Management Company
Randall Sandstrom / Steve Cook Telephone 020 7079 0483 / 020 7079 0481
Stifel Nicolaus Europe Limited
Neil Winward / Mark Bloomfield / Gaudi Le Roux Telephone 020 7710 7600
International Fund Management Limited
Chris Hickling Telephone 01481 737600
About Sequoia Economic Infrastructure Income Fund Limited
The Company is a Guernsey registered closed-ended investment company that 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. The Company has been advised that the Shares can be considered as "excluded securities" for the purposes of the FCA rules regarding the definition and promotion of Non-Mainstream Pooled Investments (NMPIs).