NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR
INTO THE UNITED STATES
Sequoia
Economic Infrastructure Income Fund Limited
("SEQI"
or the "Company")
Monthly
NAV and portfolio update - November 2024
The
NAV per share for SEQI, the
largest LSE listed infrastructure debt
fund,
increased to 94.87 pence per share from the prior month's NAV per
share of 94.37 pence, representing an increase of 0.50 pence per
share.
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pence
per share
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31
October NAV
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94.37
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Interest
income, net of expenses
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0.71
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Asset
valuations, net of FX movements
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-0.26
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Subscriptions
/ share buybacks
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0.05
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30
November NAV
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94.87
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No
expected material FX gains or losses as
portfolio is 100% currency-hedged. 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.
The
Investment Adviser is currently locking in higher interest
rates;
64.6% of portfolio is in fixed rate investments as of November
2024, and 54.7% of the portfolio is invested in Defensive sectors
(Renewables, Digitalisation, Utility and Accommodation).
Long-term
outlook on inflation and base rates points towards a beneficial
tailwind to NAV: Abating
inflation is expected to provide a foundation for steadier credit
markets, as falling rates would typically increase asset
valuations. The
portfolio pull-to-par is estimated at 3.5 pence.
Investor updates - Interim
report
The
Investment Adviser is pleased to announce that its half-year report
and results presentation were both released on 5 December
2024.
Link: Results Centre - Sequoia
Economic Infrastructure Income Fund Limited
Market Summary - November 2024
Interest rate announcements, inflation data and asset
valuations
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On 6 November 2024, the Bank of
England ("the BoE") reduced interest rates by 0.25% to 4.75%. On 7
November, the Federal Reserve ("the FED") also reduced interest
rates by 0.25% to 4.75%. The European Central Bank ("the ECB) did
not reduce interest rates during November 2024, but did reduce them
by 0.25% on 23 October 2024 to 3.25%, and again by a further 0.25%
to 3.00% on 12 December 2024. Looking ahead, the Fed is also
expected to cut policy rates by a further 0.25% during December
2024.
In the
UK, the most recent data on CPI inflation shows that it increased
to 2.3% during October from 1.7% in September 2024. In the US, CPI
inflation rose to 2.7% in November, from 2.6% in October 2024. In
the ECB, CPI inflation increased to 2.3% for November 2024, up from
2.0% during October 2024. CPI inflation has risen across all three
regions mainly due to continued upward pressure from energy
costs.
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The markets generally expect energy
costs to trend downwards during the next few months, which could
help to reduce CPI inflation across all three regions. In the UK,
wholesale gas prices are stabilizing, and the Ofgem energy price
cap will reduce costs for households. In the US, energy prices are
expected to stabilize or fall due to increased domestic oil and gas
production. In Eurozone, high natural gas storage levels and
diversified supply chains are reducing the risk of sharp price
increases.
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Once a downwards trend toward a
lower interest rate environment unfolds, this will be supportive of
fixed rate loans and bonds. Further, as short-term rates begin to
fall, yield curves will become less inverted or turn positive
again, supporting a bid for risk in the market.
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As inflation abates in the long run,
the likelihood of future interest rate cuts increases, which makes
alternative investments such as infrastructure more attractive when
compared to liquid debt. The markets have also priced in at least
one further rate cut between now and the end of the year across all
three regions.
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Portfolio update - November 2024
Revolving Credit Facility and cash holdings
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The Company is undrawn
on its revolving credit facility (RCF) of £300.0 million and
currently has cash of £81.9 million (inclusive of interest income),
and undrawn investment commitments of £81.4 million. The Company's
pipeline of opportunities remains strong in the near-term and
further updates will be provided to shareholders upon the
completion of new deals.
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The
RCF is primarily utilised to manage cashflows through the timing of
new investments against the repayment of existing
investments.
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Portfolio Composition
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The Company's invested portfolio
consisted of 54 private debt investments and 4 infrastructure
bonds, diversified across 8 sectors and 28 sub-sectors.
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57.4% of the portfolio comprised of
senior secured loans ensuring defensive positioning.
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It had an annualised
yield-to-maturity (or yield-to-worst in the case of callable bonds)
of 9.72% and a cash yield of 7.30% (excluding deposit
accounts).
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The weighted average portfolio life
remains short and is approximately 3.5 years. This short duration
means that as loans mature, the Company can take advantage of
higher yields in the current interest rate environment.
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Private debt investments represented
90.5% of the total portfolio, allowing the Company to capture
illiquidity yield premiums.
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The Company's invested portfolio
currently consists of 35.4% floating rate investments and remains
geographically diversified with 49.2% located across the USA, 25.7%
in the UK, 25.0% in Europe, and 0.1% in Australia/New
Zealand.
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Portfolio highly diversified by sector and
size
Share buybacks
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The Company bought back 4,414,454 of
its ordinary shares at an average purchase price of 75.44 pence per
share in November 2024.
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The Company first started buying
back shares in July 2022 and has bought back 199,342,282 ordinary
shares as of 30 November 2024, with the buyback continuing into
December 2024. This share repurchase activity by the Company
continues to contribute positively to NAV accretion.
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New
investment activity during November 2024
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SEQI has participated in the
refinancing of OCU Group (formerly known as Project Octopus in the
loan book) with £55 million in total commitments, of which £45
million was paid during November 2024. OCU Group is a leading UK
infrastructure engineering services provider. The YTM on this loan
is 10.25%.
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The
Company has also purchased €19.5 million of ETT bonds, a Term Loan
B acquisition financing to a leading multi-utility service provider
in the Netherlands. The YTM on this loan is 6.78%.
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Investments that repaid during November 2024
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The Company received a full
repayment from Project Octopus for £50 million during the
refinancing of its loan, as stated above.
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The Company also received a full
repayment from Westinghouse on its senior bonds for £24.8 million.
The borrower is a leading provider of infrastructure services to
operating nuclear power generating facilities, based in the
USA.
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Non-performing loans
There are no updates on the
non-performing loans.
Top
Holdings
Valuations
are independently reviewed each month by PWC.
Full
list of SEQI's Portfolio Holdings and SEQI Monthly
Factsheet
http://www.rns-pdf.londonstockexchange.com/rns/0643Q_1-2024-12-13.pdf
http://www.rns-pdf.londonstockexchange.com/rns/0643Q_2-2024-12-13.pdf
About Sequoia Economic Infrastructure Income Fund
Limited
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SEQI is the UK's largest listed debt
investor, investing in economic infrastructure private loans and
bonds across a range of industries in stable, low-risk
jurisdictions, creating equity-like returns with the protections of
debt.
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It seeks to provide investors with
regular, sustained, long-term income with opportunity for NAV
upside from its well diversified portfolio. Investments are
typically non-cyclical, in industries that provide essential public
services or in evolving sectors such as energy transition,
digitalisation or healthcare.
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Since its launch in 2015, SEQI has
provided investors with nine years of quarterly income,
consistently meeting its annual dividend per share target, which
has grown from 5p in 2015 to 6.875p per share in 2023.
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The fund has a comprehensive ESG
programme combining proprietary ESG goals, processes and metrics
with alignment to key global initiatives
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SEQI is advised by Sequoia
Investment Management Company Limited (SIMCo), a long-standing
investment advisory team with extensive infrastructure debt
origination, analysis, structuring and execution
experience.
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SEQI's monthly updates are available
here: Monthly Updates - seqi.fund
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For
further information please contact:
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Investment
Adviser
Sequoia Investment Management Company
Limited
Steve Cook
Dolf Kohnhorst
Randall Sandstrom
Anurag Gupta
Matt Dimond
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+44
(0)20 7079 0480
pm@seqimco.com
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Brokers
Jefferies International Limited
Gaudi Le Roux
Stuart Klein
Harry Randall
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+44
(0)20 7029 8000
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Public
Relations
Teneo (Financial PR)
Martin Pengelley
Elizabeth Snow
Faye Calow
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+44
(0)20 7260 2700
sequoia@teneo.com
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Administrator / Company
Secretary
Sanne Fund Services (Guernsey) Limited
Matt Falla
Shona Darling
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+44
(0) 20 3530 3107
Admin.Sequoia@apexgroup.com
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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