Sequoia Economic Infrastructure Income Fund Limited (SEQI)

(Alliance News) - Sequoia Economic Infrastructure Income Fund Ltd said its "resilient" portfolio delivered a strong performance in its first-half of the year.

The London-based investor, which looks for opportunities in income-generating economic infrastructure debt with a portfolio of private debt and bond investments, said its results were supported by "strong" interest income generation and improving economic conditions.

For the six months ended September 30, the fund's net asset value per share rose 1.3% to 95.03 pence from 93.77 pence in March.

The total NAV return stood at 5.1% in the first-half, with Sequoia EIIF saying it on track to meet target annual gross return of between 8% and 9%.

The company maintained its interim dividend at 3.44 pence per share, in line with its full-year target of 6.88 pence, representing an annualized yield of 8.6%.

Sequoia said that its portfolio remains "well-positioned", with 55% allocated to defensive sectors like utilities, renewables, and digital infrastructure.

The proportion of non-performing loans dropped to 3.7% as of November 30 from 5.5% at September 30, aided by progress in resolving challenging positions.

Chair James Stewart said: "I am delighted to announce another robust half year performance. As the economic challenges experienced in the previous financial year have begun to ease in the last six months, the company has demonstrated its adaptability, resilience, and ability to generate significant cash.

"This performance supports our ongoing balanced approach to capital deployment, underpinned by the investment adviser's extremely selective approach as it considers the strong pipeline of future opportunities, benefiting from ongoing strong market demand for infrastructure debt finance."

The company noted that declining inflation and interest rates are expected to enhance the appeal of its infrastructure debt-focused strategy. With 62% of its portfolio in fixed-rate loans, Sequoia said it is well-placed to benefit from a lower interest rate environment.

Sequoia repurchased 49.3 million shares during the period to address its discount to NAV, which widened from 14% to 16%.

The company closed the period with GBP68.8 million in cash and a pipeline of GBP500 million in potential investments, averaging yields of 10%.

Chief Executive Officer Randall Sandstrom said: "While the global macroeconomic outlook is varied, there are reasons to be cautiously optimistic that we are entering a less volatile economic environment.

"Our investment strategy remains focused on positioning the portfolio to deliver attractive and sustainable returns even should the environment not improve by maintaining the robust credit quality of our portfolio and investments in economic infrastructure assets with defensive characteristics."

Shares in Sequoia were marginally higher at 80.23 pence each in London on Thursday morning.

By Eva Castanedo, Alliance News reporter

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