NAV and Investment Update

12 April 2019

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 29 March 2019 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 103.41p from the prior month's NAV of 102.77p per share. The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.45p;

·      An increase of 0.18p in asset valuations; and

·      No change in NAV from FX movements.

As at 29 March 2019, the Company had cash of £55.2m and outstanding drawings on its Revolving Credit Facility of £113.9m, resulting in net leverage of £58.6m. The Company also had undrawn commitments, and one additional investment in settlement, collectively valued at £99.4m.

The Company's invested portfolio comprised of 48 private debt investments and 21 infrastructure bonds across 8 sectors and 26 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.6% and a weighted average life of approximately 4.4 years. Private debt investments represented 85.1% of the total portfolio and 69.4% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 94.8% of par. Investments which are pre-operational represented 16.2% of total assets.

The Company's invested portfolio remains geographically diverse with 46% located across the US, 19% in the UK, 26% in Europe, and 9% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has invested in selective opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector and jurisdiction.

As at 29 March 2019, approximately 100% of the Company's 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 March include:

·      A $35.0m secondary bond purchase of GenOn's variable rate 2039 bonds backed by a portfolio of power generation assets in the US;

·      A £6.0m secondary bond purchase of Voyage care's 5.875% 2023 bonds backed by a portfolio of registered care homes providing care to people with complex needs;

·      A £5.0m secondary loan acquisition of Euro Garages, one of the largest independent forecourt retailers in the UK;

·      An additional €1.3m disbursement to Hatch Student Housing in Cork, Ireland;

·      A €3.0m secondary bond purchase of Naviera Armas SA's variable rate 2023 bonds backed by a fleet of twenty-three ferries which provide passenger and freight maritime transportation services in Spain;

·      A €1.0m secondary bond purchase of Naviera Armas SA's variable rate 2024 bonds;

·      A €1.0m secondary bond purchase of Teekay Shuttle Tankers' 7.125% 2022 bonds backed by a fleet of shuttle tankers optimised for deepwater oil transport; and

·      An additional £100k disbursement to Bannister Senior Secured 2025, a specialist mental healthcare service provider in the UK.

The following investments were prepaid during March:

·      The $35.7m primary loan to Epic Midstream; a midstream oil and gas facility located in West Texas;

·      The £4.7m mezzanine loan to Welcome Break; a leading motorway services operator in the UK; and

·      The $1.9m class C notes issued by Castlelake 2015-1, an aircraft securitisation company.

 

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Hawaiki Mezzanine Loan	USD	Private	Mezz	56.4	TMT	Undersea cable	11.1
Salt Creek Midstream	USD	Private	Senior	53.1	Utility	Midstream	8.5
Tracy Hills TL 2025	USD	Private	Senior	46.2	Other	Residential infra	10.5
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.4	Transport	Ferries	6.1
Bannister Senior Secured	GBP	Private	Senior	42.1	Accomm.	Health care	8.0
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	41.0	Transport	Port	9.4
Kaveh Senior Secured TL 2021	USD	Private	Senior	38.5	TMT	Data centers	8.2
Bizkaia TL 2021	EUR	Private	HoldCo	35.5	Power	Electricity gen.	7.7
Bulb Senior TL 2021	GBP	Private	Senior	35.0	Utility	Electricity supply	7.2
Aquaventure	USD	Private	Senior	34.6	Utility	Water	8.1
Project Warsaw	EUR	Private	Senior	31.0	Renewables	Solar & wind	5.9
Seaport TL B	USD	Private	Senior	30.4	Transport	Port	8.3
Sunrun Hera 2017-B	USD	Private	Mezz	30.4	Renewables	Solar & wind	8.2
Sacramento Data Centre	USD	Private	Senior	28.4	TMT	Data centers	10.0
GenOn Energy Senior Secured	USD	Private	Senior	26.7	Power	Electricity gen.	9.4

Note (1) - excluding accrued interest

Market Summary

A total of 82 project finance transactions closed in March throughout the Company's eligible jurisdictions, worth $32.6bn in aggregate. Notable transactions during the month include:

·      A CAD $46.3m financing of the acquisition of the 280MW Bayside CCGT Power Plant in Canada;

·      A €350m financing of the construction of the Skinansfjellet and Gravdal wind farms in Norway; and

·      A £301m financing of the development of the Rookery South EfW plant in Bedfordshire, UK.

The US economy added 196,000 jobs in March 2019, with the unemployment rate at 3.8%. US GDP is now projected to grow between 2.0% and 2.5% in 2019, lower than 2.9% growth seen in 2018. The Federal Reserve has indicated that it is now unlikely to raise interest rates until 2020.

Brexit uncertainty and the global economic slowdown remains an issue in the UK. UK economic growth has been revised down to 1.3% for 2019, although the unemployment rate remains low, at 3.9%. Sterling remained volatile throughout the month, moving along with a series of Brexit votes.

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.