Last checked at 
14 Jun 2018 07:00
14 June 2018
Sequoia Economic Infrastructure Income Fund Limited
("SEQI" or the "Company")
Net Asset Value as at 31 May 2018 and Investment Update
Ordinary Share update
The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 101.10p from the prior month's NAV of 100.39p per share. The changes in NAV arose primarily through:
· Interest income net of expenses of 0.54p;
· An increase of 0.01p in asset valuations;
· A decrease of 0.03p from FX movements; and
· A gain of 0.19p from issuance of new equity.
During May, the Company completed its successful, oversubscribed equity placing, raising approximately £75.7m of gross proceeds. The proceeds have principally been used to repay approximately £70.7m of the Company's £75.0m gross leverage, resulting in gross leverage of £5.0m, or 0.60% of NAV, at 31 May 2018. The Company's total net assets after deducting net borrowings were therefore £830.5m at month end. The Company also had undrawn commitments and one additional investment in the process of settlement collectively valued at £98.4m.
The Company's invested portfolio comprised of 37 private debt investments and 19 infrastructure bonds across 8 sectors and 23 subsectors, and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.4% and a weighted average life of approximately 4.9 years. Private debt investments represented 81.4% of the total portfolio and 70.3% of it comprised floating rate assets. The weighted average purchase price of the Company's investments was c.96.0% of par. Investments which are pre-operational represented 15.0% of total assets.
The Company's invested portfolio remains geographically diverse with 44% located across the US, 25% in the UK, 23% in Europe, and 8% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy, but is considering selective opportunities in Spain.
As at 31 May 2018, approximately 95% of NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover the cash costs associated with its hedging activities.
The Company's settled investment activities during May include:
· A £7.5m primary loan to Euro Garages, one of the largest independent motorway services providers in the UK and Europe;
· An additional £1.3m disbursement to Clyde Street student housing in Glasgow; and
· The sale of $29.0m Dulles Greenway 2029 zero-coupon bonds.
There were no called/prepaid positions during the month of May.
Ordinary Portfolio Summary (15 largest settled investments)
Transaction name | Currency | Type | Ranking | Value £m(1) | Sector | Sub-sector | Yield to maturity / worst (%) |
Hawaiki Mezzanine Loan | USD | Private | Mezz | 52.9 | TMT | Undersea cable | 12.0 |
Salt Creek Midstream | USD | Private | Senior | 48.9 | Utility | Midstream | 6.8 |
A'lienor S.A.S. (A65) | EUR | Private | Senior | 38.8 | Transport | Road | 5.7 |
Tracy Hills TL 2025 | USD | Private | Senior | 36.0 | Other | Residential infra | 10.3 |
Cory Environmental | GBP | Private | HoldCo | 31.3 | Utility | Waste-to-energy | 8.5 |
Sunrun Hera 2017-B | USD | Private | Mezz | 30.1 | Renewables | Solar & Wind | 7.4 |
Bulb Energy Senior Secured | GBP | Private | Senior | 26.9 | Utility | Electricity supply | 8.8 |
Aquaventure | USD | Private | Senior | 26.3 | Utility | Water | 8.2 |
Abteen Ventures | USD | Private | Senior | 26.3 | TMT | Data centers | 7.9 |
Warnow Tunnel | EUR | Private | Senior | 25.4 | Transport | Road | 6.4 |
Terra-Gen Power TL B | USD | Private | Senior | 23.4 | Renewables | Solar & wind | 9.9 |
Clyde Street Glasgow | GBP | Private | Senior | 20.6 | Accomm. | Student housing | 8.0 |
Exeltium Mezzanine | EUR | Private | Mezz | 19.3 | Power | PPA | 9.4 |
Welcome Break No.1 Ltd | GBP | Private | Mezz | 18.3 | Transport | Motorway services | 8.7 |
Theatre 2007-1 D | GBP | Public | Mezz | 15.4 | Other | Private Hospitals | 13.1 |
Note (1) - excluding accrued interest
Market Summary
A total of 28 project finance transactions closed in May throughout the Company's eligible jurisdictions, worth $4.6bn in aggregate. Notable transactions during the month include:
· A €160m long term financing of the first 89 MW phase of the Oweninny wind farm in County Mayo, Ireland.
· A CAD $1.2bn financing of the Finch West light rail in Toronto, Canada. The bonds are senior secured.
· A €600m acquisition of the 450MW Neart na Gaoithe offshore wind farm.
The US economy added 223,000 jobs in May 2018, with unemployment at its lowest level since early 2000, and with average hourly earnings showing a year-on-year gain of 2.7%.
Despite the turbulence in Europe caused by the Italian coalition of Eurosceptic parties, unemployment in the Eurozone also ticked down slightly to 8.5%, which is the lowest recorded rate in the Eurozone since December 2008.
The Bank of England's Monetary Policy Committee declined to raise rates in May. However, earnings growth has moved above inflation, and the BOE is still projecting 0.4% growth in Q2 2018.
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
Stifel Nicolaus Europe Limited +44 (0)20 7710 7600
Neil Winward
Mark Bloomfield
Gaudi Le Roux
Tulchan Communications (Financial PR) +44 (0)20 7353 4200
James Macey White
Martin Pengelley
Elizabeth Snow
Praxis Fund Services Limited (Company Secretary) +44 (0) 1481 755530
Matt Falla
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.