25th Jun 2025 10:17
(Alliance News) - Sequoia Economic Infrastructure Income Fund Ltd on Wednesday posted lower earnings in financial 2025, despite insisting that interest income remained "strong".
The Guernsey, Channel Islands-domiciled fund is run by London-based Sequoia Investment Management Co Ltd. Sequoia Economic invests in private loans and bonds, financing various industries in what it describes as "stable, low-risk jurisdictions".
In the financial year that ended March 31, earnings per share decreased to 5.04 pence from 6.58p in 2024.
Net asset value per share was 92.55 pence at March 31, down from 93.77p on-year. Total NAV was GBP1.4 billion, down from GBP1.5 billion.
Sequoia Economic attributed this to interest income of 8.17p per share during the year, offset by dividends, operating costs and a 1.45p per share reduction in valuation, after the write-down of a non-performing loan.
Based on the share price at March 31, which was 78.30p versus 81.10p a year before, the fund was trading at a wider discount to NAV of 15% compared to 14%. According to Sequoia Economic, all investment firms, but especially those in the alternatives sector, have been facing "challenging" market conditions.
Sequoia Economic shares were flat at 80.30p on Wednesday morning in London.
"While emphasising we are not complacent with the level of our discount, we are pleased that our discount is towards the narrow end of the market range, and has been one of the least volatile in the sector," the company noted. According to its own calculations, the average share price discount for renewable energy, infrastructure and debt investments rose to 22% from about 21% during the year. This is based on an assessment of 40 trusts with a combined market capitalisation of GBP23 billion at March 31.
Sequoia Economic asserted it was working to manage the discount through share buybacks, which totalled GBP55.9 million in the recent year, down from GBP88.2 million the previous year. Buybacks resulted in a 0.70p per share improvement to NAV during the 12-month period, due to the few number of shares in issue, Sequoia Economic said.
The fund maintained a total dividend of 6.875p in financial 2024, and its annualised dividend yield rose to 8.8% from 8.3% in 2024. The company said its dividend was 1.00-times cash covered, compared to 1.06-times in 2023, due to "cash drag".
Sequoia Economic's goals are to eliminate the trading discount, maintain credit quality, and deliver a portfolio yield of 9% to 10% despite a "high level of global uncertainty". The company plans to remain "prudent" when it comes to credit risk and new investments.
Since March 31, greater market volatility has benefitted lenders, Sequoia Economic suggested, giving the company confidence it remains "in good stead" to meet return targets regardless of a potentially declining interest rates.
"Given the high level of global demand for infrastructure capital, our investment advisor's pipeline of opportunities remains strong and they are able to adopt a highly selective approach to investment," commented Chair James Stewart.
Sequoia Investment Management said it will continue to focus on discipline and defensive positioning.
By Holly Munks, Alliance News reporter
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