Sequoia Economic Infrastructure H1 2026 Earnings Report

Sequoia Economic Infrastructure EPS Results

• Actual EPS: GBX 4.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Sequoia Economic Infrastructure Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Sequoia Economic Infrastructure Announcement Details

• Quarter: H1 2026
• Date: 12/2/2025
• Time: After Market Closes
• Conference Call Date: Friday, November 28, 2025
• Conference Call Time: 4:00AM ET

Sequoia Economic Infrastructure (LON:SEQI)ome Fund Limited invests in a diversified portfolio of senior and subordinated economic infrastructure debt investments through its subsidiary Sequoia IDF Asset Holdings S.A. The Company operates through investment in senior and subordinated infrastructure debt instruments and related and/or similar assets segment. Its investment objective is to provide investors with regular, sustained, long-term distributions and capital appreciation from a diversified portfolio of senior and subordinated economic infrastructure debt investments. Its principal investment policy is to invest in a portfolio of loans, notes and bonds. It invests in various market sectors, such as transport, transportation equipment, utilities, power, renewable energy, telecommunications infrastructure and infrastructure accommodation. Sequoia Investment Management Company Limited is the investment advisor of the Company.

Sequoia Economic Infrastructure H1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: SEQI reported solid returns with NAV per share up 1.2% to GBP 0.9367, an annualized NAV total return of 10.1% for the half and a current dividend yield of ~8.6%, with dividends cash-covered at 1.01x.
• Positive Sentiment: Portfolio credit metrics remain conservative—NPLs fell to 0.6% (from 5.5% a year ago), ~57% of assets are senior secured loans, construction exposure is low at 11.7%, and the weighted equity cushion is ~38%.
• Positive Sentiment: Management is actively allocating capital—buybacks totaled ~17m shares in the period (213m since July 2022), a GBP 350m pipeline (avg gross yield ~9%) supports selective deployment, and there is scope for a modest increase in leverage to fund opportunities.
• Neutral Sentiment: Strategy and positioning emphasize selectivity and interest-rate hedging (≈60% fixed-rate or hedged) with reduced U.S. and data-center exposure and continued focus on UK/Europe and power-related opportunities amid rising competition for private credit deals.

Presentation

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Good morning, everyone. Welcome to the first half fiscal year 2026 results call for SEQI. This covers the period 1 April 2025 through 30 September 2025. I'm Randall Sandstrom, and on the call with me this morning are Steve Cook, Matt Diamond, and Rahul Narang. Rahul is an Executive Director in SIMCo's credit transactions team, and he's one of our senior originators. If we could just go right to page one to the introduction, let me just first give a short synopsis of what SEQI offers. The current dividend yield as of the 30th of September was 8.83%, and today the current dividend yield is 8.6%. We had an annualized NAV total return of 10.1% for the reporting period. SEQI, of course, offers exposure to a fixed income portfolio in a defensive asset class backed by infrastructure assets.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

During the period, we had a resilient portfolio generating substantial cash. Our NAV per share growth was 1.2% to GBP 0.9367, up from GBP 0.9277. We had dividends for the period of GBP 0.034375 per share, which is consistent with our full year dividend target of GBP 0.06875 per share, and the dividend was cash covered at 1.01x times. We've maintained credit quality in the portfolio without a reduction in targeted yields. We finished the period with 57.2% of the portfolio in senior loans with low construction risk of just less than 12%, and that's well south of our 20% max on construction. We've made good progress on non-performing loans. They now represent only 0.6% of the portfolio, and that's down from 5.5% a year ago.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

We had an environment of stable or gradually declining interest rates during the period, and this has been supportive for SEQI. Our current pull-to-par upside is GBP 0.031 per share, and that is through 30 September 2028. By pull-to-par, what I am talking about is just the upside effect of our loans maturing at par if they are currently trading at a small discount because of changes in interest rate movements. We finished the period with a strong pipeline of investment opportunities using our very selective and rigorous investment process. The size of that pipeline was GBP 350 million equivalent, with an average gross yield of about 9%. I think, as everybody knows, we have a very proactive and balanced approach to capital allocation. During the period, we bought back nearly 17 million shares, and we have been a leader in the buyback area, and our buyback has been going since July of 2022.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

We've seen a very modest—we have now the potential for a very modest increase in fund leverage, where we can take advantage of our good pipeline of investment opportunities. Lastly, for the period, we had a sustained increase in our ESG score, finishing the period at 65.44, up from 64.65. If we could move to the next slide now.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Thanks, Randy. This page provides a summary of some of the key financials for the half year, and we've just touched on some of them, but just to give a little bit more detail, we've seen total net assets fall very slightly to about GBP 1.4 billion. That's in the context of the net asset value per ordinary share increasing, but obviously also a very significant share buyback ongoing program, which has reduced the number of shares. The net result is we've seen a very small reduction in the overall size of the portfolio. Having said that, many of the portfolio characteristics remain very similar. The portfolio yield to maturity is still holding up at a very good level, about 9.7%. That's in the context, obviously, of falling interest rates in many jurisdictions.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

We've seen a good solid total return for the period, with the NAV up per share of about 1.2%, plus the dividend resulting in a total return for the half year of about 5%, which annualizes to 10.1%, which again, I think is a very good result in the current market environment. The dividend remains cash covered at 1.01x times, which is a modest improvement versus the previous period. As we touched on, the ESG score has slightly improved as well. If we can turn to the next page, please. Here we have a NAV bridge for the period. I think it is very self-explanatory. The biggest driver is clearly interest income at GBP 0.043 p per share over the period. The largest offsetting reduction are dividends at 3.44. You can immediately see that dividends are very well covered by interest income.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Expenses include not just the operating expenses, but also the cost of leverage. That comes in at GBP 0.066. That is pretty much entirely offset by positive market movements, and they arise from a number of things, including pull-to-par as a number of our loans get close to the maturity. We've had some loans repay or sold where we've realized gains, and we've had continued good resolutions on things like Bulb. Overall, you know, a really good half year for market movements. Smaller items include acquisition costs, which is the cost of marking loans down to the bid side. It is not a cash cost. It is just a cost on the making of new loans. FX movements, which is a small positive adjustment that we have a fully hedged portfolio. We do get for accounting and mark-to-market reasons, small gains or losses. They tend to cancel out.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

In this half year, it manifests itself as a small gain. Finally, the share buybacks added about GBP 0.017 per share, which clearly is positive. Thank you. Next slide, please.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

Thanks, Steve. I'll now take you through the long-term SEQI performance updated for the six months. As you can see on this chart, we've got three lines. We've got the dark, the black line, which is the SEQI NAV total return. That's NAV performance plus dividends. We've got the SEQI share price total return, so share price plus dividends, and the comparable line, which is the light blue, GBP hedged high yield bond benchmark total return. As you can see, since IPO, and this goes back now 10 and a half years, on a NAV total return basis, with the steady stream of quarterly dividends, we continue to comfortably outperform the high yield bond benchmark, and that's on average by over 300 basis points annually.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

This is after fees and expenses as well as losses, and it reflects the significant yield pickup that we can achieve by investing in private mid-market infrastructure loans using a highly selective approach and with a strong active portfolio management capability. Looking at the share price total return, even taking into account the prevailing market-wide discount for listed alternative income funds investing in relatively illiquid private assets, we are consistently at or above the long high yield bond benchmark. I'd like to then hand back to Steve to take you through a bit more detail on our portfolio characteristics.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Thanks, Matt. If we go on to the next slide, you can see here a snapshot of the portfolio as of the 30th of September of this year. The portfolio remains very highly diversified, as can be seen from the chart in the bottom half of this page, where we're spread across a very wide range of different types of sectors. Digitalization remains the largest such sector, although you'll see actually that our exposures within that have been falling over time, followed by power and other sectors then such as transportation. I think there's a couple of very interesting things we can touch on here. One is we still have a very low exposure to projects in construction. It's currently only 11.7% of the portfolio.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Our exposure is capped under the terms of the fund at 20% of our portfolio, or put it another way, 80% or more of the portfolio needs to be to projects that are operational and have a track record and are not exposed to all the risks of construction. As it stands at the moment, in fact, it's close to 90% of the portfolio that has got that characteristic. A relatively low level of exposure to construction. The majority of our debt, about 57%, still consists of senior secured loans. That's the lowest risk point on a company's balance sheet, and the portfolio is predominantly private debt. About 95% of the portfolio is private debt, and we focus on that because it gives us an opportunity to outperform public credits such as high yield bonds and leverage loans.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

In fact, that's the analysis that Matt has just taken you through, right? The reason we can have this long-term outperformance is because of our focus in private debt. Geographically, we remain well diversified. About 30% of the portfolio within the U.K., 40% in North America, 28% in Europe, excluding the U.K. If we go on to the next slide, please, I'm going to talk about some of the similarities and also some of the differences that have manifested itself over the last 12 months within the portfolio. I think a few things that have stayed the same. As I said earlier, the portfolio remains highly diversified. We've got 53 different loans only, slightly less than 56 than a year ago, even though the fund size has got a little bit smaller.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

The average maturity and average weighted average life of the loans is pretty similar, about 3.2 years. Relatively short-dated loans, and we like that. It's a good way to manage risk, and it's also a good way to be able to redeploy capital into attractive sectors. The modified duration of the portfolio remains low, and that's again a measure of the interest rate sensitivity of the portfolio. It's 2.1 now compared to 2. The equity cushion, so in other words, the weighted average amount of equity within the companies that we lend to has remained really very consistent, about 38% of the balance sheet. One way to think about that is it's very similar to making a loan at 62% loan to value, right? The debt represents only a proportion of the value of the assets of the borrower.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

The equity cushions, the amount of excess assets or excess value, is about 38%. All of that value needs to be lost before lenders suffer a loss. Those are all very similar. Just a couple of interesting differences on this page. One is our exposure to North America has declined substantially from about 47% a year ago to about 41% now. I think that is a reflection of some of the policy changes that we have seen in the U.S. over time, which have made things like renewable energy much more difficult to invest in. Also, assets in the transport sector in the U.S. could well be affected by, for example, tariffs. If you think about things like container ports, aviation, shipping, all could suffer from downturns in trade.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

The U.S. remains obviously a very large, growing, important market, but perhaps a little bit less attractive than 12 months ago. That is reflected in us increasing our exposure to the U.K. and Europe predominantly. The other thing that has changed is that our exposure to data centers continues to fall. A year ago, this was about 13%. We have brought it down now to a bit less than 10%. I think the reason is that there has been, as everyone I am sure will be aware, an enormous amount of capital raised for data centers. That has resulted in, we believe, lending terms getting a little bit less attractive over time, and we therefore have preferred to focus in other areas where we can see better value for money. One example would be financing the provision of power to data centers rather than data centers themselves.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Finally, the third big change, which Randy mentioned, is that our exposure to non-performing loans has declined very, very materially from about 5.5% of the portfolio a year ago to about 0.6% now. That is a reflection of resolutions on some cases, such as Bulb and Clyde Street. In other cases, we take always a view of marking things hopefully very cautiously and conservatively. That obviously reflects in the fact that they now are a very low proportion of the loan book. I will pass on now to Rahul, who will go through the next slide.

[Rahul Narang, Executive Director at Sequoia Investment Management Company Limited]

Thanks, Steve. Let me turn to page seven. This is where we talk about a transaction that we completed recently in SEQI. SEQI made a senior secured loan of approximately EUR 55.5 million, and this is to finance construction CapEx on a portfolio of solar projects in Poland. SIMCo originated and negotiated this deal bilaterally with the ultimate parent company of the borrower, which is Golden Peaks Capital. Golden Peaks Capital itself, it's a leading developer. It's a leading independent power producer in that region. It has a very substantial track record of developing, owning, and operating assets in Poland. This deal also benefits from robust fundamentals of the jurisdiction itself. If you look at Poland, it's the fifth largest population center in the EU. It is a large power consumer. It's got a fast-growing economy, and it relies heavily on coal for its electricity.

[Rahul Narang, Executive Director at Sequoia Investment Management Company Limited]

While it is making steady progress in moving its electricity system away from coal, they still have some way to go. They have some stiff targets to achieve by 2030. Also, for Poland, energy transition is as much about energy security and resilience as it is about decarbonization. This senior EUR loan that we have made recently, it will mature in three years with yield to maturity of 8.9%. Turning to page eight, here we show some stats on our deal sourcing. Our sourcing channels are very diverse. It is a pretty solid mix of bilateral relationships with corporates, with financial sponsors, but also banks and intermediaries.

[Rahul Narang, Executive Director at Sequoia Investment Management Company Limited]

The solar deal that we've just talked about, we did in Poland, it's a good example of one of the things that we really like to do, which is lending in mid-market, core infrastructure, originating those deals bilaterally or in a small club where needed. It is in this space where competition relatively is in lenders' favor, which typically tends to translate into better pricing and/or better downside protection for lenders. This sourcing strategy is reflected on the chart on the right. Nearly 45% of our deals have been bilateral. We are sole lender on those deals. In total, nearly 75% of our deals have been either bilateral or a tight club, as I said.

[Rahul Narang, Executive Director at Sequoia Investment Management Company Limited]

This is where we're able to use the advantage of flexible capital, customize the debt solution for the borrower, and in return, improve economics or lender protections, typically over and above what we may get in a broadly syndicated deal. The chart in the middle shows a diverse range of situations that we tend to get involved in. As the chart shows, we clearly like situations where we are putting capital alongside fresh equity to finance new CapEx or finance acquisitions. I'll let my colleague, Matt Diamond, take you through the market opportunity for SEQI.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

Thank you, Rahul. On the next slide, we'll just address a little bit more about the broader market conditions in which we operate. One of the key features of infrastructure is the benefits the sector gets from what we call the mega themes that are driving growth and appetite for investing. That's both in equity and credit. You can see on the right-hand side, quite a dramatic increase in funds under management or assets under management in the sector. I'll come back to that in a minute. The key themes in particular at the moment have been driven by digitalization and energy transition. There are plenty of deals in those sectors.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

As Steve has pointed out, we are able to be particularly selective in those sectors because in any industry, there is a risk of too much capital chasing deals or there being sort of more concentrated risks. We are very cognizant of that, and we take that into account. Fortunately, infrastructure has a very broad range of other assets we can address that are also highly thematic. Some of these are longer term, such as urbanization and aging societies, which are key demographic shifts that continue, particularly in the mature jurisdictions where we invest. Now, what does all this sort of add up to in terms of this deal growth? One measure is what you call the global infrastructure financing gap. This has been calculated by consultants and other organizations over the years, partly to encourage governments to allocate more capital and to plan better for investment.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

It also has the impact of encouraging more private capital to assist. Now, the gap that has been calculated, for example, in the U.S. alone, and this is by the American Society of Civil Engineers for the decade ahead, is about a $3.7 trillion gap between the identified infrastructure needs of the U.S. versus the capital that is expected to be available. That is a gigantic gap. Similar gaps are being identified in other jurisdictions, not just in North America, but in Europe and Asia and elsewhere. Significant contributors to that gap include the replacement of aging or inadequate infrastructure. I would say transportation, electric grids, utilities, water, waste, and other such longer-term assets are included in that. Digitalization and kind of more sort of modern assets is much harder to calculate the needs going forward.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

We believe that some of these numbers are probably underbate, and there's more likelihood that the gap will increase rather than decrease. Climate resilience, the requirement for low emissions and energy security add further impetus to this gap. In terms of geographies, Steve has mentioned that the U.S. allocation has been a little reduced recently in our portfolio as an active decision. Having said that, the United States does remain a major source of deals. It represents 50% or more of the broader credit market. One area, clearly, the U.S. is less attractive recently is the renewables space, with the administration being negative on that sector. In Europe and in the U.K., these are currently very active markets for new deals with governments, particularly reliant on the private sector to step in and help finance assets.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

Asia-Pacific is at a much earlier stage of market development, particularly outside the relatively mature capital markets of Australia and New Zealand. There is certainly longer-term potential in areas such as energy transition and digitalization. Interest rates do remain relatively high, particularly in the U.K. and in the U.S. While euro rates have come down until the middle of this year from their peak in mid-2024, they have somewhat stabilized, and Europe continues to be a market that we look at actively. We've spoken already about the resilience of infrastructure credit, particularly compared to the broader private credit market, and further updates in Moody's and other reports support that thesis with defaults and loss rates for infrastructure, particularly high-yield infrastructure, being significantly lower than that of broader corporate credit, reflecting the nature of the underlying cash flows and assets in our sector.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

Returning to the chart, this is actually just part of our market. This is the private equity infrastructure assets under management. This is quite a key borrower segment. We do do direct transactions, but this is the Preqin data that shows the strong growth in the private equity allocated to it. You can see at the bottom right, there is a lighter blue segment. That is the amount of private debt under management allocated to infrastructure. There is a huge opportunity for debt to grow and meet the requirements of our equity borrowers. On that point, I will hand back to Randy to conclude our presentation today.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Yes, thank you, Matt. If we just turn to the closing remarks on page 10, you see three points here: performance, agility, and opportunity. I would like just to take a couple of minutes to discuss each of those.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

We feel these are three important hallmarks of SEQI. On performance, the portfolio has had solid performance, and that's in the context of being a diversified portfolio, as you've heard, which is right across loans, sectors, subsectors, and jurisdictions, and also in the context of meeting all of our dividend targets and maintaining the long-term outperformance versus the high-yield bond benchmark, which Matt talked about earlier. For agility, what we mean here is that SEQI is very cash-generative. The reason for that is that we have a relatively short average life of right around four years. We see a lot of principal coming back. We also have a fairly high yield on the portfolio. There is a lot of interest income as well. This does make the portfolio quite agile.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

What that means, practically speaking, is that we can buy back shares and fund that buyback, which we've been doing since July 2022. At the same time, we can still make selective new investments into loans to keep the portfolio fresh and keep it thematic and keep it well-diversified. Also, at the same time, if necessary, we can pay off the RCF, sorry, the revolving credit facility. That is paid down now. The point is that because of the cash flow that comes into SEQI, we're able to do all three of those things at the same time, if necessary. Finally, we feel that SEQI does offer a really good opportunity in the sense that investors can benefit from these favorable market conditions that Matt talked about by investing into a diverse theme, a diverse portfolio of infrastructure credit opportunities.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

As I mentioned right at the beginning, right now, the current dividend yield is a strong 8.6%. The annualized NAV total return over the last six months was 10.1%. Again, this opportunity gives investors exposure to a fixed-income portfolio in a defensive asset class backed by infrastructure assets. This ends the presentation portion of today's call, and we will now open it up to Q&A. We have our first question that has come in, and it is: "Hi, has the environment changed so that dividends can be increased yearly with RPI?" Steve will answer that.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Yes, thanks, Randy. Obviously, decisions around the dividend are fundamentally a question for the board. I think one of the things they look at clearly is the outlook for rates, the income generation of the portfolio, the sort of overall economic outlook. As we say in the interim financial statements, there are no current plans to increase the dividend, but it remains under review. I do not think I can really add, excuse me, add much more to that answer, unfortunately.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

The next question, this one's for you, Steve. How is the portfolio positioned for falling interest rates?

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Yeah, I think it's something we've been very conscious of. Although rates haven't fallen as fast as people were expecting 12 months ago, I think the outlook in sterling and dollars especially is still for falling rates. What we've done in light of that is increase the fixed-rate proportion of the portfolio. That's done in two ways. One is by making fixed-rate loans, and the other is through a hedging strategy. We have about 60% of the portfolio either fixed-rate or hedged to fixed-rate. That should position us really well in a falling-rate environment.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Steve. Next question is: "What proportion of loans that we look at do we end up doing?" That number is pretty low. We do about 10% of what we see. Really, the reason for that is that we have a very rigorous and thorough investment process. That process really boils down to three formal committees that we have. I think most investors have heard this before, but just for those of you who have not, we have an origination committee where we start to look at loans. We then move to a new business committee, which is next in the process. We finish with an investment committee. During that process, we weed out most of what we see. The reason we would weed things out, it could be on a return basis.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

It could be on ESG grounds, or it could be on a risk basis. That could be looking at financial risk, business risk, operational risk, any number of reasons. The answer to the question is about 10%, and that's pretty much unchanged. If we go to the next question, "NPLs down, which is great. Is there a pickup in assets in the portfolio under enhanced supervision or any signs of stress in any positions?

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Yeah, I can take that one. The answer is no. The sort of proportion of assets that are under enhanced scrutiny has remained constant. It's about 15% of the total portfolio. That doesn't at all mean that they're non-performing loans or distressed. It's just things that we have more focus on. I think we'd expect that to remain broadly constant over time. It's just a natural dispersion around the mean. In general, we're really pleased with the performance of the portfolio. We've talked about NPLs falling to 0.6%, which obviously is really low for any sort of loan book. We think the overall sort of lending environment remains benign. I think the overall reflection is a reflection overall, rather, of the fact we've had quite conservative underwriting standards over the last few years. Focus on senior secured debt, operational projects.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

We haven't tried to be aggressive in terms of credit quality. Instead, we've stuck to core transactions, core infrastructure, good quality loans.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Steve. We've got another question that's come in. I'll be happy to do this. It's asking for comments around the buyback program. That is something, obviously, that we don't comment on other than what's been published. Just to remind investors in the results, we talked about 17 million shares that have been bought back over this most recent six-month period. The total number of shares since we started our buyback program that have been bought back are 213 million shares. We are happy with that. It's a solid program. We were early in doing that. As we mentioned, we started that way back in July 2022.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Also to remind investors, the comment by the chair in the results on the buyback, and I'll quote that, "If unwarranted levels of discount remain, we expect to continue to buy back shares as appropriate." If we move on from that, looking at the next question, "Can you expand on the operational performance of ACG? What is the expected timeframe for repayment? And are there any other creditors in the structure?

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Yeah, I can take that one. We have put quite a bit in the interims on ACG because it is one of our very largest positions. We are really pleased with the operational performance of the business. We have seen very, very good focus on the quality of care, and that has manifested itself into all good CQC ratings over the last 12 months. We have seen other KPIs improve as well. That has been very, very pleasing to see. As we have said in the past, this is not a, on the equity side, it is not a long-term hold for us. We are not a private equity fund. We received, obviously, the majority of the equity as part of the restructuring of the business. The whole stack is valued very cautiously. We mark the equity at zero. As we have said previously, we have a plan for exiting this position.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

We haven't published a detailed timeline yet, but we have started to make progress on the strategy for unwinding our exposure here.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Steve. We're seeing lots of good questions come in. Matt, here's one for you. Is SEQI seeing competition from other debt funds?

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

Yes, I guess the short answer is yes. Having said that, we think we are in a sort of large niche that is relatively less understood and with relatively less experienced teams looking at it. You'll have read a lot about private credit in newspapers, particularly in the U.S. A lot of that refers to this kind of more generic corporate lending, LBO financings, and so on in the very large sort of U.S. private equity, private debt market. Most of the largest lenders around the world do not distinguish. They kind of have one large strategy that covers private credit. There can be all sorts of sectors addressed in that. It is typically much more kind of sort of commercially exposed and maybe with some cyclical elements, maybe with technology or other sort of growth sectors in there.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

The only sector that is, for example, some of the rating agencies like Moody's, the only sector that they seem to kind of really have a distinguishing analysis on is the infrastructure space. It is about a single-digit percentage, I would say, of the broader corporate credit market, somewhere sort of below 10%. There are probably relatively few, I would say less than 10 sort of specialists in infra credit. Yeah, yeah. We are probably the largest listed infra credit private credit investor. In that respect, yes, we have got a good market position. We do compete with some of those other private funds. We also do compete with direct investors. Particularly, insurance companies have a large exposure to credit in general, and that includes private credit. Having said that, we can also partner, and a lot of our loans are quite fungible.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

If there's a $200 million loan, GBP 200 million loan, we don't want to do all of that in SEQI. We would need to partner on that loan both with other fund competitors that we might know, but also with direct investors. That also includes sovereign wealth funds and large sort of sophisticated multinational pension fund groups. Yeah, short answer is yes. We find that the space is still relatively undercovered by specialist teams, and it's growing fast enough, really, to provide plenty of fodder for ourselves and others.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Matt. Next question. You mentioned in the results, borrowers taking advantage of tighter lending margins and prepaying loans. Can you say how you see spreads changing in your pipeline? If there were to be significant reduction in spreads and rates, would you consider greater allocation to Mez or Holdco debt?

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Yeah, I can take that question. I think overall spreads are holding up pretty well. We target 400-600 over. That has been a consistent range, really, since the IPO. To answer the second part of the question, excuse me, I think the answer is simply no, right? We're not interested in going down the credit curve and chasing yields that way.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Steve. Another question here is, what trends are we seeing in deployment in the sectors, company types, and geographies?

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Yeah, I can take that. I think we've touched on a couple of these things. One is we've seen a decrease in our exposure to the U.S. I think some of the current policies there are unhelpful, right? In things like renewables and the transport sector. We are seeing, though, good opportunities in the U.K. and Europe, pretty broadly based, particularly in sort of power, both conventional and renewable. Also, things in particular like power to the data center sector, where we've done one transaction in Ireland, and we hopefully see others. We think that's a very interesting area for us because it's much more complex and bespoke than typical data center financing. It gives us a good opportunity to earn excess yields and add alpha to the portfolio.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Steve. Another question that has come in. Matt, maybe you could take this one. Has increasing money being raised into private credit increased the competition on your deals?

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

Yeah, I guess there's a bit of overlap with the previous question. But yes, there has been an increase in capital raised. I would say it's probably less dramatic in infra credit. For example, I think the largest fund raised for infra credit is $5 billion-$6 billion fund out of North America. And then there's a few below that as well. Whereas in the broader private credit market, there are some, for example, US BDCs that are over $50 billion. There are some very large infra equity funds, $20 billion-$30 billion funds, private equity funds, real estate funds. But to my knowledge, there are no direct, there are no specific infra credit funds above $10 billion. So relatively speaking, I think that there's less specific capital. And that's because there's not that many firms with a long track record in the segment, and it is specialized.

[Matt Diamond, Managing Director and Head of Client Capital at Sequoia Economic Infrastructure Income Fund]

Yes, it will have some impact. There have been several fundraisers over the last few years. As mentioned before, there's more than enough product for us to invest in. In fact, with those infrastructure gaps continuing to rise, we do not think that the market conditions and the balance of supply and demand will get any worse. In fact, it will get more increasingly favorable for us as we move forward.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Matt. We have got another one here. Steve, perhaps this one is for you. Are we seeing sufficient term premiums available for longer-dated loan opportunities? How has this changed over the last year or so?

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Yeah, I don't think the term premiums have really changed over time. You can definitely get a yield pickup for doing five- to ten-year loans versus, say, two- to five-year loans. Having said that, our preference is to do shorter-dated loans in general. That would be typically maturities of four to six years. I think the reason for that is twofold. One is, although you can get a bit more yield by doing longer-term deals, you can manage risk better with shorter-term deals, right? The refinancing and repayment of loans, I think, is a credit positive. The second is we actually really value the sort of recycling of capital within the portfolio. It enables us to move into better-value sectors and out of more expensive sectors.

[Steve Cook, Head of Portfolio Management at Sequoia Economic Infrastructure Income Fund]

Data centers would be a good example of that, where we've quite materially reduced our exposure over the last 12 months. Obviously, when we do that, we also collect lending fees for the fund. Although the interest rates can be higher, actually getting lending fees more frequently helps to compensate for that. Our preference, like I said, is to do shorter rather than longer-dated loans in general.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

Thank you, Steve. We also have a comment or a question, rather, about Jamie Dimon's comment about private credit. This was in the wake of the Subprime Auto Parts Company, Auto Prime Lending Company, rather, going into bankruptcy. Maybe just to comment on that, there is a pretty widely publicized SME refi wall coming in 2026 and 2027. That has been talked about for quite some time. Some parts of the SME market would be considered in private credit. I think if this were a year and a half ago when we had more or less an inverted yield curve, that refi wall would be a bit more challenging. I think now that we have an upward-sloping yield curve in most markets, that will make that refinancing easier.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

I also think a lot of the smaller leveraged loan-type companies have been flushed out as a result of rates having gone up over the last couple of years. I think that'll make that refinancing easier as well. I think, as folks know, infrastructure debt is an important subset of the larger private credit market. What we don't see in infrastructure debt, which you do see in the leveraged loan market, are these so-called covenant-lite packages. That's just not a thing in infrastructure debt. They are highly covenanted loans. I think the other thing that is really important that supports infrastructure debt or infrastructure in general is just that the demand for infrastructure capital is significantly higher than the supply of infrastructure capital.

[Randall Sandstrom, CEO and CIO at Sequoia Economic Infrastructure Income Fund]

If you do some homework on that, you'll see that most estimates put that number worldwide at several trillion dollars expected over the next 15-20 years. In the U.S., over the next 10 years, that number is $3 trillion-$4 trillion. We think that provides a pretty strong underpinning for infrastructure debt. That takes us to the end of the Q&A period. We would like to thank everybody for dialing into the SEQI results call.

Participants

Executives

• Randall Sandstrom, CEO and CIO
• Steve Cook, Head of Portfolio Management
• Matt Diamond, Managing Director and Head of Client Capital

Analysts

• Rahul Narang, Executive Director at Sequoia Investment Management Company Limited