Sequoia Economic Infrastructure Income Fund (SEQI) H2 2024 earnings summary

Executive summary

• Achieved a NAV total return of 8.1% and a share price total return of 9.6% for FY2024, outperforming high-yield bond benchmarks and increasing NAV per share from 93.26p to 93.77p.

• Maintained a resilient, diversified portfolio of 55 investments across sectors and regions, emphasizing senior secured debt and operational projects, with a 9+ year track record of meeting dividend targets.

• Continued market-leading share buyback program, repurchasing over 160 million shares since July 2022, supporting NAV accretion.

• Strong cash flows supported a consistently covered dividend of 6.875p per share, with FY2024 cash dividend cover at 1.06x.

Financial highlights

• Net asset value per share increased by 0.51p to 93.77p; net assets declined by £100 million to £1.52 billion, mainly due to buybacks.

• Earnings per share rose to 6.58p from a loss of 1.02p last year, driven by higher interest rates.

• Dividend per share increased to 6.875p, reflecting a 10% uplift from Q4 FY2023.

• Portfolio yield to maturity at 10%, down from 11.9% in 2023 due to tighter spreads.

• Share price discount to NAV narrowed by 30bps to 13.5%, outperforming sector peers.

Outlook and guidance

• Anticipates policy rate reductions later in 2024, expected to further narrow the NAV discount.

• Strong demand for infrastructure credit driven by energy transition, digitalisation, and government fiscal pressures.

• Expects NAV upside from pull-to-par as loans approach maturity, with 4.1p per share expected recovery over 3-4 years.

• Pipeline remains strong and diversified, with targeted gross portfolio returns of 9%-10%.

• No immediate plans to increase the dividend, but policy remains under review.