Sequoia Economic Infrastructure Fund Regulatory News (SEQI)

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

15 November 2023

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV per share for SEQI, the specialist investor in economic infrastructure debt, increased to 91.84 pence per share from the prior month's NAV per share of 91.16 pence, (being the 29 September 2023 cum-income NAV of 92.88 less the dividend of 1.71875 pence per share declared in respect of the quarter ended 29 September 2023 and payable on 24 November 2023), representing an increase of 0.68 pence per share.

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

As the Company is approximately 100% currency hedged, it does not expect to realise any material FX gains or losses over the life of its investments. However, the Company's NAV may include unrealised short-term FX gains or losses, driven by differences in the valuation methodologies of its FX hedges and the underlying investments - such movements will typically reverse over time.

Market Summary

The US Federal Reserve ("Fed"), Bank of England ("BoE") and The European Central Bank ("ECB") left rates unchanged at the start of November at 5.25-5.50%, 5.25% and 4.0% respectively. Market participants expect rates to remain at current levels in the short-term, as central banks wait for inflation to ease further. The latest CPI figures show that the UK's annual rate of inflation remained unchanged at 6.7% in September, which is higher than the comparative US figure of 3.7%. In the Eurozone, inflation fell to a two-year low of 2.9% in October, far below the 4.3% recorded in September and down 9.2% over the inflation rate for the whole of 2022. In the USA, consumer prices index rose by 3.2% in the year to October, below the 3.3% expected, down from the 3.7% recorded in September and representing the first decline in four months. Core inflation, which strips out food and energy, fell to 4.0%, the lowest since September 2021.The desired 2% inflation target is officially expected to be realised by the end of 2025 in the Eurozone and the UK, and by the end of 2026 in the USA.

Towards the end of October, the yield on the benchmark 10-year U.S Treasury note surpassed 5% for the first time since 2007, ended the month just under 4.9% and has fallen to 4.5% in early November. The investment adviser believes that this market volatility in the bond market will reduce over time, as the market gains confidence in inflation being tamed and creating the potential for interest rates to ease. This represents a helpful tailwind to the Company's NAV in the years ahead, as falling interest rates are expected to increase the value of SEQI's underlying portfolio. Investors are also reminded that unrealised mark-to-market adjustments should reverse over time as the investments approach their repayment date (the "pull-to-par" effect), assuming there are no performance related adjustments required to their value. As at 31 October, the positive effect of pull-to-par is estimated to be worth approximately 4.4p per share over the course of the life of the Company's investments.

The most recent data provided by the International Monetary Fund (IMF) in early November indicates moderate real GDP growth rates for the UK, Eurozone and the USA in 2024. Specifically, the USA is projected to achieve a growth rate of 1.5%, while the Eurozone and the UK are expected to see growth rates of 1.2% and 0.6% respectively. The Investment Adviser believes the USA infrastructure market enjoys a positive outlook, which is well supported by its bipartisan legislation, such as the Infrastructure Bill and the Inflation Reduction Act. More than half of the Company's portfolio is currently invested in the USA (51.9%) and the pipeline of opportunities remains strong in the USA.

The Investment Advisor remains committed to good credit quality investments during the current period of market volatility and believes that the portfolio is taking advantage of credit markets that are currently favourable to debt providers. As loans mature, the Company is able to redeploy capital at higher returns for less risk and improve its cash yield and average credit rating. Tight lending conditions across the banking sector and also the liquid credit markets (specifically the high yield and leveraged loan markets) mean that the Investment Adviser can be extremely selective in the opportunities it chooses to pursue. This is evidenced by the attractive yields on the Company's pipeline deals. Further updates will also be provided to shareholders upon the completion of more investments before the end of the year and in early 2024.

New £56m private bilateral loan

The Investment Adviser is pleased to announce the arranging of a £56m private bilateral facility to finance the acquisition of the entire issued share capital of Esken Renewables by the sustainable infrastructure fund, Pioneer Infrastructure Partners SCSp, managed by Pioneer Point Partners LLP. The proposed transaction with Esken, the listed aviation and renewable energy group, represents an enterprise value of £107.7m and is conditional inter alia on shareholder approval. The transaction is expected to complete in early December 2023.

Share buybacks

The Company continued to repurchase shares and bought back 14,313,170 of its ordinary shares at an average purchase price of 77.78 pence per share in October 2023. The Company first started buying shares back in July 2022 and has bought back 101,382,542 ordinary shares as of 31 October 2023 with the buyback continuing into November. The Board and the Investment Adviser remain confident in the Company's NAV, which is updated monthly through an independent valuation and has expected upside over time from the pull-to-par effect.

Portfolio update

The Company is attractively positioned from a liquidity perspective with cash of £130.0m available, compared to undrawn commitments on investments of £90.9m (including Esken Renewables). The Company is currently not geared and its revolving credit facility is undrawn, resulting in additional capacity to manage liquidity. The Company also has an active pipeline of new investments with attractive yields in the current interest rate environment and can access its revolving credit facility to manage the misalignment of investment and repayment timings, while prudently balancing its capital allocation between new investment opportunities and share buybacks. The pipeline is diversified by sector, sub-sector, and jurisdiction, with yields currently ranging from 9% to 11%, as evidenced by the new private bilateral loan with Esken.

The Company's invested portfolio consisted of 53 private debt investments and 3 infrastructure bonds across 8 sectors and 26 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 10.9% and a cash yield of 7.5% (excluding cash returns on market-to-market fund holding, deposit accounts and investments rated lower than single C). The weighted average portfolio life remains short and is approximately 3.5 years. Private debt investments represented 97.4% of the total portfolio. The Company's invested portfolio currently consists of 48.9% floating rate investments and remains geographically diverse with 51.9% located across the USA, 25.8% in the UK, 22.2% in Europe, and 0.1% in Australia/New Zealand.

At month end, approximately 100% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate liquidity to cover margin calls, if any, on its hedging book. The Company has entered into a 90 million USD Swap with a maturity of seven years to lock in the current high rates being paid by borrowers and to allow more dynamic management of the portfolio's fixed rate exposure.

The following investments settled in October 2023 (excluding small loan drawings of less than GBP 0.5m)

? An additional Senior loan for £1.0m to Project Octopus, a telecom infrastructure services provider based in the UK.

The following investments were sold or prepaid in October 2023:

? A full sale of Apollo Aviation 2017 bonds, an aircraft leasing company based in the USA.

Non-performing loans

The Investment Adviser continues to actively manage its non-performing loans with the loans being independently marked to market by PwC as part of the monthly valuation process. Further updates will be provided to shareholders in the future when material developments occur.

Ordinary Portfolio Summary (15 largest settled investments)

Note (1) - excluding accrued interest

Disclaimer: the dividend increase is a target and not a profit forecast

The Company's monthly investor report and additional portfolio disclosure will be made available at: https://www.seqi.fund/..

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.

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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.