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Sequoia Economic Infrastructure Income Fund Limited - NAV and Investment Update

This content has been sourced from: https://www.investegate.co.uk/sequoia-econ-infra--...

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 102.41 pence per share from the prior month's NAV of 102.28 pence per share, representing an increase of 0.13 pence per share.

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

 

pence per share

April NAV

102.28

Interest income, net of expenses

0.48

FX movements, net of hedges

0.01

Decrease in asset valuations

-0.36

May NAV

102.41

The decrease in asset valuations in the NAV attribution this month is primarily due to several sizeable US power positions being marked down as a result of the negative impact of the lower than expected 2022/2023 Base Residual Auction (BRA) PJM capacity results that were released this month and a significant price decline in one of our least liquid positions based on a small secondary trade in the bond near the end of May.

Portfolio update

The Investment Adviser, the Investment Manager, and PWC, the independent valuation agent, have continued their close analysis of the effects of COVID-19 on the Company's portfolio. The Investment Adviser expects the previously identified uplift in valuations of the assets where COVID-19 has impacted performance to continue. This trend is expected to persist as economies continue to recover and lockdowns start to further ease globally.

As at 28 May 2021, the Company had cash of £84.7m and had drawn £83.6m on its £280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at £72.6m. The Company's invested portfolio comprised of 63 private debt investments and 11 infrastructure bonds across 8 sectors and 30 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 9.0% and a cash yield of 5.6%. The weighted average portfolio life is approximately 4.3 years. Private debt investments represented 94% of the total portfolio and 55% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 98.9% of par. Investments which are pre-operational represented 11.1% of total assets.

The Company's invested portfolio remains geographically diverse with 48% located across the US, 20% in the UK, 26% in Europe, and 6% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has selectively invested in opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.

At month end, approximately 99% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover margin calls on its hedging book.

The Company's settled investment activities during May include:

· An additional £20.0m loan to Bulb Energy, an electricity supplier in the UK;

· An additional disbursement of $8.0m to Prime Data Centres for the development of a data centre campus in Sacramento, California;

· A €5.77m primary loan in Madrid Metro, a refinancing facility for rolling stock to the Madrid Metro;

· An additional $1.5m disbursement to Kaveh Ventures, a leading developer of hyperscale data centres in Ashburn, Virginia; and

· A €1.0m primary purchase of Ziton AS' Super Senior WCF 2022 loan backed by four offshore wind maintenance vessels.

None of the Company's investments were sold or prepaid in May.