Open Offer, Placing, Offer for Subs Cshares

RNS Number : 3083B

Sequoia Economic Infra Inc Fd Ld

06 October 2015

 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES (INCLUDING TO U.S. PERSONS, AS SUCH TERM IS DEFINED UNDER REGULATION S OF THE US SECURITIES ACT OF 1933, AS AMENDED, THE "SECURITIES ACT"), CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

6 October 2015

Sequoia Economic Infrastructure Income Fund Limited (the "Company")

Open Offer, Placing and Offer for Subscription

Further to the announcement by the Company on 16 September 2015 and the subsequent approval of the resolutions at the Company's EGM on 5 October 2015, the Board today announces further details in relation to its Open Offer, Placing and Offer for Subscription for a target issue of 200 million new C Shares at an issue price of 100 pence per C Share (the "Issue").

The Board has been pleased with the Company's continued development and level of deployment of funds to date. Since the Company's launch, the Investment Adviser has successfully deployed approximately 82.7 per cent. of the net proceeds raised at IPO, including committed but unsettled trades, into a diverse portfolio of infrastructure debt investments. The portfolio is spread over 24 investments across the UK, Western Europe, Australia and the US. These investments are spread across 6 sectors and 14 sub-sectors (as at 30 September 2015). The Investment Adviser continues to see a growing and attractive pipeline of investment opportunities. Since the IPO, the Company has paid its first dividend of 1 pence per Ordinary Share for the quarter ended 30 June 2015 and is confident of meeting its dividend target of five per cent. in its first year and six per cent. thereafter. The audited NAV of the Company is 95.96 pence as at 28 August 2015 (excluding the dividend of 1 pence paid in August 2015). The Company's unaudited NAV at 30 September 2015 will be announced on or around 14 October 2015. The Board expects the proceeds of the IPO to have been invested, as originally envisaged, within nine months from the IPO.

The Issue is being implemented by way of an Open Offer, Placing and Offer for Subscription of C Shares. The target size of the Issue is £200 million before expenses. The Directors recognise the importance of pre-emption rights to Ordinary Shareholders. Accordingly, a substantial proportion of the C Shares (being 125,033,218 C Shares) is being initially offered to Qualifying Shareholders by way of an Open Offer pursuant to which they will be entitled to apply for 5 C Shares for every 6 Ordinary Shares held on the Record Date. The balance of the C Shares, together with any C Shares not allocated to Qualifying Shareholders under the Open Offer (including under an Excess Application Facility), will be made available, at the discretion of the Directors, under the Placing and/or Offer for Subscription. On Admission of the C Shares to the Standard Segment of the Official List, the Net Asset Value per C Share will be approximately, and not less than, 98 pence per share.

The Company expects to shortly be publishing a prospectus (the "Prospectus") in connection with the Issue.

The Company will invest the Net Issue Proceeds in accordance with the Company's investment policy and will seek to acquire target investments as similar as possible to those to be described in the Target Portfolio to be outlined in the Prospectus. However, there can be no assurance that any of these investments will remain available for purchase after the Issue or, if available, at what price the investments can be acquired.

It is estimated that 50 per cent. of the Net Issue Proceeds will be invested within three months of Admission, 75 per cent. of the Net Issue Proceeds will be invested within six months of Admission and that the full amount of the Net Issue Proceeds will be fully invested within nine months after Admission.

Benefits of the Issue

The Investment Adviser continues to see significant opportunities in the infrastructure debt market.  The Board believes that it would be in the interests of the Company to raise further funds through a share issuance to take advantage of these opportunities.  Specifically, the Board believes that the current opportunities available to the Investment Adviser will enable it to further diversify its existing portfolio and spread the fixed costs of running the Company across a wider base. The Directors further believe that growing the size of the Company would increase secondary market liquidity for investors and make the Company more attractive to a wider investor base.

Issue structure

The Issue comprises an Open Offer, Placing and Offer for Subscription of C Shares. These C Shares will be issued at the Issue Price of 100 pence per share and will convert into Ordinary Shares at the point where 85 per cent. of the Net Issue Proceeds have been invested or committed to be invested in accordance with the Company's investment policy. To the extent that less than 85 per. cent of the Net Issue Proceeds have been invested by the first anniversary of Admission of the C Shares, the C Shares will convert into Ordinary Shares at this point.

The Board recognises the importance of avoiding material cash drag to holders of Ordinary Shares and therefore, in the event that Conversion occurs on the first anniversary of Admission when less than 85 per cent. of the Net Issue Proceeds have been invested, the Directors will, at their sole discretion, consider returning to C Shareholders (prior to such a Conversion) any uninvested Net Issue Proceeds. For the avoidance of doubt, any unsettled trades or orders will be considered 'invested' proceeds and any return to C Shareholders will exclude cash required for the Company's working capital purposes.

The new Ordinary Shares arising on Conversion will rank pari passu with the Ordinary Shares then in issue for dividends and other distributions and will be listed on the premium segment of the Official List. Full details of the C Shares and Conversion will be set out in the Prospectus.

The investments made by the Company with the Net Issue Proceeds will be accounted for and managed as a distinct pool of assets by the Company until the Calculation Time for Conversion. The Conversion Ratio will then be calculated and, pursuant to Conversion, the C Shares in issue will convert into a number of Ordinary Shares calculated by reference to the relative Net Asset Values per share of the C Shares and the Ordinary Shares.

The Company currently intends to target an ongoing dividend for holders of C Shares equivalent to five per cent. per annum until Conversion Time (by reference to the Issue Price) and to pay dividends quarterly in relation to the C Shares with a first payment in respect of the period to 31 March 2016.

The target number of C Shares to be issued pursuant to the Issue is 200 million but the Directors may, at their discretion, issue up to a maximum number of 250 million C Shares pursuant to the Issue if the Directors, in consultation with the Investment Adviser and Stifel, believe that appropriate opportunities exist for the deployment of additional Issue proceeds in accordance with the Company's investment objectives and policy.

Expected Timetable

Record Date for entitlements to participate in the Open Offer	5.00 p.m. on 5 October 2015
Ex-entitlement date for the Open Offer	8.00 a.m. on 6 October 2015
Publication of Prospectus and Open Offer opens	6 October 2015
Basic Entitlements and Excess CREST Open Offer Entitlements credited to CREST stock accounts of Existing CREST	As soon as practicable after 8:00 a.m. on 7 October 2015
Recommended latest time for requesting withdrawal of Basic Entitlements and Excess CREST Open Offer Entitlements from CREST	4.30 p.m. on 16 October 2015
Latest time and date for depositing Basic Entitlements and Excess CREST Open Offer Entitlements into CREST	3.00 p.m. on 19 October 2015
Latest time and date for splitting Open Offer Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 21 October 2015
Latest time and date for receipt of completed Open Offer Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 23 October 2015
Placing and Offer for Subscription
Placing and Offer for Subscription open		6 October 2015
Latest time and date for receipt of completed Application Forms Application Forms and payment in full under the Offer for Subscription		3.00 p.m. on 23 October 2015
Latest time and date for receipt of placing commitments under the Placing		12.00 p.m. on 27 October 2015
Other key dates
Results of the Open Offer, Placing and Offer for Subscription announced		28 October 2015
Initial Admission of the C Shares to the Official List and commencement of dealings on the London Stock Exchange		8.00 a.m. on 2 November 2015
CREST accounts credited in respect of C Shares to be held in uncertificated form		On or around 2 November 2015
Dispatch of definitive share certificates in respect of C Shares		On or around 4 November 2015

The dates and times specified above are subject to change. In particular, the Directors may (with the prior approval of Stifel) bring forward or postpone the closing time and date for the Issue. In the event that a date or time is changed, the Company will notify persons who have applied for C Shares of changes to the timetable by the publication of a notice through a Regulatory Information Service. References to times are to London times unless otherwise stated.

Admission to trading

Applications will be made for the C Shares to be admitted to the standard segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities. It is expected that admission will become effective, and that dealings in the C Shares will commence on or around 2 November 2015.

Further details

The ticker for the C Shares is SEQC. The ISIN for the C Shares is GG00BYP6HV03 and the SEDOL is BYP6HV0.  The ISIN of the Basic Entitlements is GG00BYP4F986 and the SEDOL is BYP4F98. The ISIN of the Excess CREST Open Offer Entitlement is GG00BYP4FK91 and the SEDOL is BYP4FK9.

Stifel Nicolaus Europe Limited is acting as sole sponsor, financial adviser and bookrunner to the Company.

A copy of the Prospectus, when published, will be submitted to the National Storage Mechanism and will shortly thereafter be available for inspection at: www.morningstar.co.uk/uk/nsm as well as on the Company's website at http://www.seqifund.com/downloads.

Defined terms used in this announcement shall (unless the context otherwise requires) have the same meaning as set out in the Prospectus.

For further information please contact:

Sequoia Investment Management Company Steve Cook Dolf Kohnhorst Randall Sandstrom Greg Taylor	[phone]
Stifel Nicolaus Europe Limited Neil Winward Mark Bloomfield Gaudi Le Roux	[phone]
Praxis Fund Services Limited (Company Secretary) Shona Darling	[phone]

About the Company

Sequoia Economic Infrastructure Income Fund Limited is a Guernsey-incorporated closed-ended investment company whose Ordinary Shares are traded on the main market of the London Stock Exchange. The Company's investment strategy is to provide shareholders with long-term distributions by owning debt exposures to economic infrastructure projects across a diversified range of jurisdictions, sectors and sub-sectors. The total net annual return target of the Company is seven to eight per cent. (by reference to the IPO price of £1 per Ordinary Share). The Company's Ordinary Shares were admitted to trading on the main market of the London Stock Exchange on 3 March 2015, following a successful, oversubscribed IPO.

IMPORTANT NOTICES

Neither this announcement nor the information contained herein is for release, publication or distribution, directly or indirectly, in or into the United States, South Africa, Canada, Ireland or Japan or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction. The securities referred to herein have not been and will not be registered under the relevant securities laws of any such excluded territory.

This announcement does not contain, constitute or form part of an offer for sale of, resale of, transfer of or delivery of or the solicitation of an offer to purchase directly or indirectly, securities in the United States or to, or for the account or benefit of a  U.S. Person (as defined in Regulation S of the Securities Act). The securities referred to herein have not been, and will not, be registered under the Securities Act or any other applicable securities laws of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, any U.S. Person. The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended, and neither the Investment Manager nor the Investment Adviser will be registered as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended.  Consequently, investors will not be entitled to the benefits and protections of the U.S. Investment Company Act of 1940, as amended or the U.S. Investment Advisers Act of 1940, as amended.  The shares of the Company will be offered and sold only to non-US persons outside the United States in reliance on Regulation S under the Securities Act.  There will be no offer of the Company's securities in the United States.  The distribution of this document may also be restricted by law in other jurisdictions.

This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for any C Shares, ordinary shares or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract.

The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Subject to certain exceptions, the securities referred to herein may not be offered or sold in South Africa, Canada, Ireland or Japan or to, or for the account or benefit of, any national, resident or citizen of Canada, Japan, Ireland or South Africa. There will be no offer of the C Shares or ordinary shares in the United States, Canada, South Africa, Japan or Ireland.

In member states of the European Economic Area (the "EEA"), this announcement is directed only at (a) persons who are "qualified investors" as defined in section 86(7) of FSMA, ("Qualified Investors") being persons falling within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (as amended, including by Directive 2010/73/EU, to the extent such amendments have been implemented in the relevant Member State and including any relevant implementing measure in the relevant Member State; (b) in the United Kingdom, Qualified Investors who are persons who (i) fall within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); (ii) fall within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc") of the Order; or (iii) are persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as "Relevant Persons").  This announcement must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with relevant persons. 

Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and no-one else in connection with the potential equity issue. Stifel will not regard any other person as its client in relation to the potential issue and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in relation to the potential issue, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

Neither Stifel nor any of its directors, officers, employees, advisers, affiliates or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or its subsidiary, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith.

The Company has been established in Guernsey and has been registered as a registered closed-ended collective investment scheme under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. It is suitable only for professional or experienced investors, or those who have taken appropriate professional advice.

Regulatory requirements which may be deemed necessary for the protection of retail or inexperienced investors, do not apply to listed funds. By investing in the Company you will be deemed to be acknowledging that you are a professional or experienced investor, or have taken appropriate professional advice, and accept the reduced requirements accordingly.

You are wholly responsible for ensuring that all aspects of the Company are acceptable to you. Investment in listed funds may involve special risks that could lead to a loss of all or a substantial portion of such investment. Unless you fully understand and accept the nature of the Company and the potential risks inherent in it you should not invest in the Company.

Further information in relation to the regulatory treatment of listed funds domiciled in Guernsey may be found on the website of the Guernsey Financial Services Commission at http://www.gfsc.gg/The-Commission/Pages/Home.aspx.

 

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