NAV and Investment Update

pence per share

31 January NAV

94.19

Interest income, net of expenses

0.71

Asset valuations, net of FX movements

-1.00

Subscriptions / share buybacks

0.05

28 February NAV

93.95

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The announcement and implementation of a range of tariffs between the U.S. and other jurisdictions have led to increased volatility in global financial markets, particularly as trade tensions continue to unfold. The Investment Adviser expects long-term tariffs to risk global growth and to add some inflationary pressures in the U.S., U.K. and Eurozone.

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As of February 2025, 55.1% of the portfolio is invested in defensive sectors (renewables, digitalisation, utilities and accommodation). The Company's investments in defensive sectors make it well-positioned to withstand economic downturns and inflationary pressures. The Investment Adviser will also continue to monitor geopolitical developments closely and remains cognisant of the emerging risks in this area and will respond as and when the situation becomes clearer.

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On 6 February 2025, The Bank of England ("the BoE") cut interest rates by 0.25% to 4.50%. On 6 March 2025, the European Central Bank ("the ECB") also reduced rates by 0.25% to 2.50%, while the Federal Reserve ("the Fed") has held rates steady at 4.75% since it reduced them by 0.25% on 18 December 2024. During March 2025, a U.S. market sell-off, driven by recession fears and trade tensions, has fuelled speculation about further rate cuts. The Fed has not signalled immediate plans to cut interest rates during the next meeting on 18 March 2025, but markets have priced in three additional rate cuts by the end of 2025.

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5-year bond yields remained stable in the Eurozone (2.12%) and U.K. (4.21%) during February 2025, as rate cuts were already priced in. In the U.S., yields fell by approximately 0.3% to 4.02% during the same period, driven by trade uncertainties and global growth concerns. Following the month, the Investment Adviser observed a steep increase in German government bond yields by approximately 0.4%, reflecting a sell-off in German bonds amid debt supply concerns and inflationary pressures. U.K Gilts have also trended upwards following month-end.

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CPI inflation eased to 2.8% in the U.S. during February 2025, down from 3.0% in January 2025, while U.K. inflation rose to 3.0% in January 2025, up from 2.5% in December 2024 (primarily due to higher transport costs). Eurozone inflation fell to 2.4% from 2.5% during the same period, nearing the ECB's target. Despite short-term pressures from tariffs, a downward trend in inflation is expected by late 2025.

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As inflation gradually abates over time, the likelihood of future interest rate cuts rises, 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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As of February 2025, the Company had drawn £39.3 million on its revolving credit facility (RCF) of £300.0 million and had cash of £36.7 million (inclusive of interest income), and undrawn investment commitments of £147.9 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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The Company's invested portfolio consisted of 54 private debt investments and 5 infrastructure bonds, diversified across 8 sectors and 30 sub-sectors.

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60.2% 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 9.70% and a cash yield of 7.32% (excluding deposit accounts).

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The weighted average portfolio life decreased marginally to 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 90.7% of the total portfolio, allowing the Company to capture illiquidity yield premiums.

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The Company's invested portfolio currently consists of 43.1% floating rate investments and remains geographically diversified with 48.0% located across the U.S, 24.6% in the U.K., 27.3% in Europe, and 0.1% in Australia/New Zealand.

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The Company bought back 4,778,924 of its ordinary shares at an average purchase price of 77.37 pence per share in February 2025.

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The Company first started buying back shares in July 2022 and has bought back 209,718,341 ordinary shares as of 28 February 2025, with the buyback continuing into March 2025. This share repurchase activity by the Company continues to contribute positively to NAV accretion.

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During the month, the Company invested $50.0 million into Project Volt, a telecommunications company that provides broadband connectivity services in the South-Central U.S. to residential customers and small- and medium-sized businesses. The borrower intends to expand its last-mile fibre network using these loan proceeds. The loan has a floating-rate yield of 9.05% as of February 2025.

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The Company has started legal proceedings on an asset equal to 0.6% of NAV which is now being classed as non-performing. The markdown on this loan during February 2025 represents an overall decline of 0.24 pence per share. The loan is backed by a recently revalued asset and is marked in line with a conservative estimate of a recovery backed by that asset. The Company is not disclosing the Loan's identity due to commercial reasons.

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The Company has received notice that its small residual exposure to the Salt Lake loan (equal to 0.1% of NAV) is scheduled to be substantially repaid in March 2025.

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The Investment Adviser continues to work closely with the 4000 Connecticut borrower and other lenders to facilitate the re-leasing of the property (and also explore other potential ways of realising value). The carrying value of the loan currently equals 1.6% of NAV and the markdown on this loan during February 2025 represents an overall decline of 0.85 pence per share.

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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.

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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

Investment Adviser 

Sequoia Investment Management Company Limited

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Anurag Gupta

Matt Dimond

+44 (0)20 7079 0480

[email protected]

Brokers

Jefferies International Limited

Gaudi Le Roux

Harry Randall

+44 (0)20 7029 8000

J.P. Morgan Cazenove (Joint Corporate Broker & Financial Adviser)

Jérémie Birnbaum

William Simmonds

+44 (0)20 7742 4000

Public Relations

Teneo (Financial PR)

Martin Pengelley

Elizabeth Snow

Faye Calow

+44 (0)20 7260 2700

[email protected]

Administrator / Company Secretary

Apex Fund and Corporate Services (Guernsey) Limited

+44 (0)20 3530 3107

[email protected]