Infralogic: SEQI fund eyes Asia investment move

Sequoia Economic Infrastructure Income Fund (SEQI) is gearing up for a push into Asia after expanding the list of countries it can invest in.

Steve Cook, head of investment management at Sequoia Investment Management Company (SIMCo), the investment advisor to SEQI, told Infralogic that SEQI is now able to target countries including South Korea, Japan, Hong Kong, Malaysia and Singapore, after a change in its investment policy.

The policy change, which was approved on Tuesday (28 July), allows the infrastructure debt fund to invest in any country that is in the OECD or has an investment grade rating.

Prior to the change SEQI could only invest in a select list of European, North American and Australasian countries.

“We have had to pass on lots of deals in Asia before, so we decided to broaden our criteria so we can target the growing debt opportunities there,” said Cook.

The new criteria also add more European countries to the list SEQI can target, notably the Baltic states, Cook said.

SEQI can target up to 30% of its investments in the Asia Pacific region, Cook added, while up to 10% can be outside Europe, the US and Asia Pacific.

As before, up to 60% of assets can be in the US and 50% can be in Europe. Previously this allocation was restricted to Western Europe only.

While the change would allow SIMCo to target Asian investments for the first time, the firm last year announced its first move to raise capital in the region, filing a prospectus for a Hong Kong-listed infrastructure debt fund.

Although listed in Hong Kong and able to invest in Asia, the fund will be more weighted to Europe and North America, similarly to SEQI. The fund however has not yet been launched.

SIMCo’s other existing fund, the unlisted Sequoia Infrastructure Debt Fund, focuses only on Europe.

The expansion of SEQI’s investment mandate also comes as SIMCo announced two major partnerships, one to help US fixed income investment giant PIMCO source infrastructure debt investments and one to work on European energy and infrastructure transactions with Anglo-South African bank Investec.

SEQI has a market capitalisation of more than GBP 1.2bn, with its shares trading at around 85 pence, a discount to its last reported net asset value of 93.17 pence. Like other listed infrastructure funds, SEQI has suffered from factors including high interest rates and economic uncertainty. 

SEQI targets senior debt with large equity cushions in digital, energy, transport, social, environmental and other infrastructure. Companies it has backed include the UK fibre network operator Community Fibre and US mobile power generation specialist Life Cycle Power.

Source: Rory Gallivan, https://ionanalytics.com/insights/uncategory/sequoia-infra-debt-fund-eyes-asia-investment-move/