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Sequoia fund reports solid half-year performance

Published 12/09/2024, 11:22 AM
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LONDON - Sequoia Economic Infrastructure Income Fund Ltd (LSE:SEQI) has reported a positive net asset value (NAV) per share growth for the six months ending September 30, with a NAV total return of 5.1%. The NAV per share increased by 1.3% to 95.03p, while dividends amounted to 3.4375p per share, in line with targets. Despite these gains, the share price total return was lower at 3.2%, due to an increase in the share price discount to NAV from 13.5% to 15.6%.

The board of the fund has continued its significant share buyback program, which began in July 2022, spending £39.5 million to repurchase 49.3 million shares during the period. This buyback initiative contributed 0.47p to the NAV per share and is expected to continue as part of efforts to support the share price and mitigate the discount to NAV. The buybacks are being managed with consideration for the portfolio's liquidity, dividend cover, and diversification needs.

James Stewart, the chair of the board, expressed satisfaction with the fund's performance, citing its adaptability and resilience in generating significant cash amid economic challenges. He highlighted the Investment Adviser's selective approach and the strong market demand for infrastructure debt finance as factors supporting the fund's balanced approach to capital deployment.

The fund, which invests predominantly in private debt related to economic infrastructure, has demonstrated defensiveness and exposure to key structural growth themes in the global economy. With a short average portfolio loan life and a significant portion of floating rate loans, the fund's valuation remains relatively insulated from interest rate movements.

Management remains optimistic about the investment pipeline, identifying potential investments with an average yield higher than the targeted range. The fund is also considering investments in Italy and Portugal, which could be new additions to the portfolio.

At present, the fund offers an attractive covered yield of 8.6% without the use of structural fund gearing. With a net cash position of £69 million, the fund has considerable flexibility for further buybacks or investments. The board has also indicated potential increased use of the revolving credit facility to support these activities.

This performance summary is based on a press release statement from Sequoia Economic Infrastructure Income Fund Ltd.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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