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Sequoia Economic Infrastructure Income Fund Limited ("SEQI" or the "Company")
Monthly NAV and portfolio update - April 2025
The NAV per share for SEQI, the largest LSE listed infrastructure debt fund, increased to 93.04 pence per share from the prior month's NAV per share of 92.55 pence, representing an increase of 0.49 pence per share.
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| pence per share |
| 31 March NAV | 92.55 |
| Interest income, net of expenses | 0.71 |
| Asset valuations, net of FX movements | -0.28 |
| Subscriptions / share buybacks | 0.06 |
| 30 April NAV | 93.04 |
The decline in asset valuations this month was driven by a decrease in the prices of US bonds, contributing to an overall reduction of 0.37 pence per share. This was largely attributed to a broader market sell-off in response to the recent tariff announcements. The portfolio pull-to-par, which is incremental to NAV as loans mature, is 4.2 pence per share as of April 2025.
No expected material FX gains or losses as the portfolio is approximately 100.5% 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 high interest rates; 59.3% of portfolio is in fixed rate investments as of April 2025.
Market Summary - April 2025
Tariff Impact & Geopolitical Analysis
| · | Recent tariff measures and trade policy shifts between the U.S. and the rest of the world have renewed volatility in international financial markets. While geopolitical frictions and protectionist rhetoric remain elevated, the 90-day pause in the U.S.-China trade dispute announced on 12 May 2025, alongside substantial mutual tariff reductions, is a constructive step toward de-escalation. President Trump's indication that tariffs are unlikely to return to previous peak levels adds some reassurance to the near-term outlook.
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| · | The Investment Adviser continues to monitor these developments closely. Although ongoing uncertainty could still weigh on global economic momentum and contribute to inflationary pressures in the U.S., U.K., and Eurozone, the recent shift provides grounds for cautious optimism that trade tensions may stabilise and support a more favourable environment for infrastructure investment.
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| · | In general, infrastructure is widely perceived to be defensive and perform well in times of heightened volatility. Within the infrastructure sector, the Company has no or little exposure to some of the more cyclical subsectors, such as oil refining, aviation and container ports. |
Interest Rate Announcements and Inflation Data
| · | During April 2025, the 10-year U.S. Treasury yield was notably volatile, trading within a range of 4.0% to 4.5%, driven by uncertainty following the announcement and subsequent pause of wide-ranging tariffs by the Trump Administration. The yield ended the month at 4.2%, broadly unchanged from the level at end-March 2025, as markets looked ahead to the anticipated commencement of trade negotiations between the U.S. and China.
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| · | In contrast, yields on 10-year Gilts and German Bunds declined over the same period, by approximately 0.25% to 4.4% and 0.3% to 2.4% respectively. This was partly driven by a rotation into perceived lower-risk assets, and also because the European Central Bank reduced the base rate by 0.25% to 2.25% on 17 April. The Bank of England also reduced its base rate by 0.25% on 8 May 2025, citing disinflationary pressures, while the Federal Reserve maintained its current policy stance.
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| · | In the U.S., CPI inflation reduced to 2.3% in April, down from 2.4% in March and its lowest level since February 2021. In the Eurozone, CPI inflation held steady at 2.2% between March and April. In the U.K., the most recent data on CPI inflation shows that it eased to 2.6% during February, from 2.8% in January.
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| · | In the near-term, the temporary trade agreement between the U.S. and China, which includes a significant reduction in tariffs is expected to further ease some inflationary pressures. While headline inflation remains influenced by residual supply chain effects and sector-specific dynamics, the de-escalation in trade tensions has tempered expectations of further price shocks from import costs.
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| · | As inflation gradually abates over time, the likelihood of future interest rate cuts increases, making 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 - April 2025
Revolving Credit Facility and Cash Holdings
| · | As of April 2025 month-end, the Company had drawn £68.1 million on its revolving credit facility of £300.0 million and had cash of £28.3 million (inclusive of interest income), and undrawn investment commitments of £128.7 million. The Company's pipeline of opportunities remains strong and further updates will be provided to shareholders once more investments are made during the next quarter.
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Portfolio Composition
| · | The Company's invested portfolio consisted of 54 private debt investments and 5 infrastructure bonds, diversified across 8 sectors and 29 sub-sectors.
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| · | 59.3% 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 9.88% and a cash yield of 7.33% (excluding deposit accounts).
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| · | The weighted average portfolio life decreased marginally to 3.3 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 90.8% of the total portfolio, allowing the Company to capture illiquidity yield premiums.
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| · | The Company's invested portfolio currently consists of 40.7% floating rate investments and remains geographically diversified with 45.1% located across the U.S., 25.2% in the U.K. and 29.7% in Europe.
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Portfolio Highly Diversified by Sector and Size
Share Buybacks
| · | The Company bought back 5,297,483 of its ordinary shares at an average purchase price of 75.88 pence per share in April 2025.
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| · | The Company first started buying back shares in July 2022 and has bought back 218,474,545 ordinary shares as of 30 April 2025, with the buyback continuing into May 2025. This share repurchase activity by the Company continues to contribute positively to NAV accretion.
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New Investment Activity During April 2025
| · | An additional purchase of Navigator 7.25% - 10/2029 bonds for $8.0m. Navigator Holdings Ltd is a market leading owner and operator of liquefied gas carriers, owning 56 vessels, and 50% of the world's largest ethylene marine export terminal.
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| · | An additional senior loan to Grange Backup Power Ltd for €5.7m. The borrower is an Irish power asset linked to a data centre.
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| · | An additional senior loan to Sunrun Radcliffe for $3.9m. The borrower is a leader in the US residential solar market. |
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No investments repaid during April 2025
Non-performing Loans
The Company continues to work towards maximising recovery from the non-performing loans in the portfolio (equal to 1.0% of NAV): There are no new announcements this month.
There are no further updates on the Company's non-performing loans.
Top Holdings
Valuations are independently reviewed each month by PWC.
http://www.rns-pdf.londonstockexchange.com/rns/9028I_1-2025-5-15.pdf
http://www.rns-pdf.londonstockexchange.com/rns/9028I_2-2025-5-15.pdf
SEQI Capital Markets Seminar - 22 May 2025
The Company will be hosting its annual SEQI Capital Markets Seminar on 22 May 2025 in London at 3pm. The event will bring together key members of the management team and external experts to discuss developments in the infrastructure credit market. Topics will include: the evolution of infrastructure debt as an asset class, trends in a fast-expanding infrastructure universe, SEQI's market outlook, digitalisation and AI in investment management, and the value of active management in high-yield infrastructure strategies.
To register for in-person attendance or online joining details please email Sequoia@teneo.com.
About Sequoia Economic Infrastructure Income Fund Limited
| · | SEQI is the U.K.'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. |
| · | 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. |
| · | 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. |
| · | The fund has a comprehensive ESG programme combining proprietary ESG goals, processes and metrics with alignment to key global initiatives |
| · | 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. |
| · | SEQI's monthly updates are available here: Monthly Updates - seqi.fund/investors/monthly-updates |
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For further information please contact:
| Investment Adviser Sequoia Investment Management Company Limited Steve Cook Dolf Kohnhorst Randall Sandstrom Anurag Gupta Matt Dimond | +44 (0)20 7079 0480 |
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| Joint Corporate Brokers and Financial Advisers Jefferies International Limited Gaudi Le Roux Harry Randall | +44 (0)20 7029 8000 |
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| J.P. Morgan Cazenove William Simmonds Jérémie Birnbaum
| +44 (0)20 7742 4000 |
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| Public Relations Teneo (Financial PR) Martin Pengelley Elizabeth Snow Faye Calow
| +44 (0)20 7260 2700 |
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| Alternative Investment Fund Manager (AIFM) FundRock Management Company (Guernsey) Limited Dave Taylor Chris Hickling
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| Administrator / Company Secretary Apex Fund and Corporate Services (Guernsey) Limited
| +44 (0)20 3530 3107
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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.
[1] Given the dividend was announced on 17 April 2025, the ex-dividend date for the interim dividend of 1.71875 pence per share is 1 May 2025 (based on the Dividend Procedure Timetable for 2025). As such, the dividend payment will be reflected in the NAV decomposition table in the forthcoming NAV announcement for May 2025.
[2] Percentage of overall NAV for non-performing loans has declined from 2.3% in March 2025 to 1.0% in April 2025, as the new total is excluding Bulb, where the Investment Adviser now expects a full recovery.
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