Sequoia Economic Infrastructure has published its first set of accounts since its initial IPO – covering the period from incorporation on 30 December 2014, through its initial flotation on 3 March 2015 through to the end of March 2016. The company’s NAV rose moderately from 98.0p per ordinary share to 98.2p.
Since the IPO and up to 31 March 2016, the ordinary share price has risen by 6.25% and investors in the IPO have received dividends of 3.5p, resulting in a gain of 9.8%. Investors in the first C Share received 1.0375 ordinary shares for each C Share they bought, generating a gain of 10.2% based upon the closing ordinary share price on 31 March 2016. As at 31 March 2016, the share price was trading at a premium of 8.2% to the NAV.
As at 31 March 2016, the portfolio comprised 34 investments, diversified by borrower, jurisdiction, sector and sub-sector, and generating an average yield-to-maturity of 8.2%. The yield on the portfolio has the potential to increase if LIBOR increases, since approximately half of the assets have floating-rate interest income.
The manager breaks down the company’s NAV performance since launch as follows:
- Interest income on the Company’s investments of 4.5p per share; plus
- Gains on foreign exchange movements of 2.4p per share, net of the effect of the Company’s hedges; less
- Adverse market movements of 2.2p per share, of which approximately 0.90p relates to the one-off cost of writing down acquired assets to their bid price; less
- Operating costs of 1.0p per share; less
- Dividends of 3.5p per share.
With respect to the “adverse market movements”, the manager says that, to a large extent, these declines in asset valuations will be reversed over time as the prices of individual assets accrete to par. Moreover, approximately 40% of the price movement was caused by marking acquired assets down to their bid price.
The company has grown considerably since launch. the initial IPO raised £147m net of costs, the first C share raised £143.9m net and the C share just completed raised £172.2m net. The manager says though that the opportunity for the Fund to deploy capital is exceedingly large.
SEQI : Sequoia Economic Infrastructure eyes “exceedingly large” target market