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 - December
2024
The NAV per share for SEQI,
the largest LSE
listed infrastructure debt fund,
increased to 94.91 pence per share from the prior month's NAV per
share of 94.87 pence, representing an increase of 0.04 pence per
share.
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pence per
share
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30
November NAV
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94.87
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Interest income, net of
expenses
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0.73
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Asset valuations, net of FX
movements
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-0.71
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Subscriptions / share
buybacks
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0.02
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31
December NAV
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94.91
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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.
Well positioned to benefit from higher interest
rates; 59.5% of portfolio is in
fixed rate investments as of December 2024, and 53.6% of the
portfolio is invested in Defensive sectors (Renewables,
Digitalisation, Utility and Accommodation).
Market Summary - December 2024
Interest rate announcements, inflation data and asset
valuations
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The European Central Bank ("the
ECB") implemented a 0.25% rate cut on 12 December, reducing its
policy rate from 3.25% to 3.00%. This followed an earlier rate cut
on 23 October 2024 for 0.25% and was part of the ECB's ongoing
efforts to stimulate the Eurozone economy amid stabilizing energy
markets. On 13 December 2024, the Federal Reserve reduced its
policy rate by 0.25%, from 4.75% to 4.50%. In the UK, the Bank of
England ("the BoE") made no changes to its policy rate during
December 2024 due to elevated inflation (CPI inflation rose to 2.6%
during November 2024, surpassing the BoE's 2.0% target).
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Despite interest rate reductions
across the Eurozone, UK and US, long-end government bond yields
rose by approximately 0.3% across all regions which was mainly due
to inflationary pressures. As such, the asset valuation of most
fixed rate instruments (59.5% of the portfolio) has declined
marginally due to the increase in risk free rates. The portfolio
pull-to-par, which is incremental to NAV as loans mature, is 3.7
pence per share as of December 2024.
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The Investment Adviser expects
inflation to gradually abate during 2025 across all three regions
due to stabilizing energy prices and improved supply chains. Once a
downwards trend toward a lower interest rate environment unfolds,
this will be supportive of the current fixed rate loans and bond
positions. 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 gradually 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. While the pace and size of
interest rate cuts will vary across the Company's different
investment jurisdictions, the general consensus remains one of
declining interest rates throughout the year.
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Portfolio update - December 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 £68.7 million (inclusive of interest income), and undrawn
investment commitments of £87.1 million.
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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 30 sub-sectors.
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58.9% 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 9.76% and a cash yield of 7.3% (excluding deposit
accounts).
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The weighted average portfolio life
increased slightly 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
90.2% of the total portfolio, allowing the Company to capture
illiquidity yield premiums.
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The Company's invested portfolio
currently consists of 40.5% floating rate investments and remains
geographically diversified with 47.5% located across the USA, 24.9%
in the UK, 27.5% 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 1,959,885 of
its ordinary shares at an average purchase price of 78.5 pence per
share in December 2024.
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The Company first started buying
back shares in July 2022 and has bought back 201,302,167 ordinary
shares as of 31 December 2024, with the buyback continuing into
January 2025. This share repurchase activity by the Company
continues to contribute positively to NAV accretion.
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New
investment activity during December 2024
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Senior loan to Grange Backup Power
Ltd for €15.2 million. The borrower is an Irish power asset linked
to a data centre. The YTM on this loan is 9.01%
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Senior loan to Project Hero for €40
million. The borrower is a Spanish market leader in land-based
healthcare transport services. The YTM on this loan is
7.19%.
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Purchased additional €2.0 million of
Techem bonds during December 2024 (the overall position on this
loan is for €10.1m). Techem is a leading provider of energy
services headquartered in Eschborn, Germany. The yield
presents a premium of around ~210bps over comparable Euro B
corporate credit. Techem Term Loan B is rated B1 by Moody's, B+ by
S&P, and B by Fitch - all with Stable Outlook.
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Investments that repaid during December 2024
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SEQI received a full repayment from
two of its three positions on Project Sienna for £6 million in
total. The borrower is a leading wood biomass fuel supplier based
in the UK. SEQI's remaining position on this loan is for £50
million. The YTM is 10.05%
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Non-performing loans
There are no updates on the
remaining non-performing loans in the portfolio.
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/4836T_2-2025-1-15.pdf
http://www.rns-pdf.londonstockexchange.com/rns/4836T_1-2025-1-15.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/investors/monthly-updates
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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
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