Sequoia Agriculture InflationSeries 1

Sequoia Agriculture Inflation - Series 1

Sequoia Agriculture Inflation Series 1 (“Series 1”) is a structured investment whereby investors obtain 100% leveraged exposure to any positive performance of S&P GSCI Agriculture ER Index (”the Reference Asset or Index”) over a 2 year period with the potential to receive an uncapped Performance Coupon at Maturity dependent on the Index Performance less the Hurdle, adjusted for changes in the AUD/USD exchange rate during the Investment Term.

Sequoia Agriculture Inflation Series 1 Performance

DateStrategy Value Indicative Unit value* Performance
Initial valueTBATBATBA
30-Jun-2022TBATBATBA

* Unit Value: Investors, please note this is a theoretical investment maturity value. This investment is designed to be held to maturity. Any investors seeking to redeem prior to maturity may receive an amount significantly different to the Indicative Unit Value stated.

The S&P GSCI ER Agriculture Index

 

The S&P GSCI Agriculture ER Index (Bloomberg Ticker: SPGCAGP), a sub-set of the S&P GSCI commodities index, aims to provide investors with a reliable and publicly available benchmark for investment performance in the agricultural commodity markets.

This index is designed as a benchmark for investment in the agriculture commodity markets and as a measure of agriculture commodity market performance over time. It is also designed as a tradable index that is readily accessible to market participants. In order to accomplish these objectives, the S&P GSCI Agriculture ER Index is calculated primarily on a world production-weighted basis and comprises the principal physical commodities that are the subject of active, liquid futures markets in the agriculture industry segment as described below. The S&P GSCI is calculated and maintained by S&P.

 

Investors should refer to the website for further information in relation to the Index and make their own independent assessment of the Index prior to investing in Units: https://www.spglobal.com/spdji/en/indices/commodities/sp-gsci-agriculture/#overview

 

Diversification

 

The Index is diversified across eight individual commodities futures contracts. The individual underlying commodity allocation of the Index as at 18 May 2022 was;

(1) Corn (30.71%)

(2) Soybean (18.57%)

(3) Wheat (21.80%)

(4) KCBT Wheat (9.54%)

(5) Sugar (7.04%)

(6) Cotton (7.13%)

(7) Coffee (4.09%)

(8) Cocoa (1.13%)

Summary of the key features

*The existence of the Hurdle gives rise to a lower Annual Interest Rate on the Loan compared to the Annual Interest Rate that would be otherwise payable on a Loan obtained to acquire Units where no such Hurdle existed, however, the Hurdle also reduces the Performance Coupon that would be otherwise payable (if any) where no such Hurdle existed.   

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Downloads

 

To find out more, and to download a copy of the Flyer, Term sheet IM and Master IM, please click on the links below.

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Key risks include:

 

  • Risk of 100% loss in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. A 100% loss will occur if there is no Performance Coupon paid at Maturity. This will be the case if the Index Performance is equal to or below +6% at Maturity. In such circumstances no Performance Coupon will be paid and Investors will incur a 100% loss in relation to the Total Investment Cost and Upfront Adviser Fee;
  • Risk of partial loss (i.e. less than 100% loss) in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. Investors may incur a partial loss if the Performance Coupon at Maturity is positive but less than the Break-Even Point;
  • Timing risks. The timing risk associated with Series 1 is significant. This is because the Investment Term is fixed and the Series Performance is required to at least generate some positive performance over and above the Break-Even Point by the time the Maturity Date arrives in order for the investor to generate a profit from their investment (ignoring any Upfront Adviser Fee and any external costs). If this does not occur then Investors will generate a loss;
  • The potential Performance Coupon is determined by reference to the Series Performance. The Series Performance is determined by reference to the Index Performance less the Hurdle, adjusted for changes in the AUD/USD exchange rate. An increase in the AUD/USD exchange rate between the Commencement Date and the Maturity Date will reduce the Performance Coupon whilst a decrease in the AUD/USD rate between the relevant dates will lead to an increase in the Performance Coupon. As such, whether or not you break-even depends on both the Index Performance and the AUD/USD exchange rate performance during the Investment Term;
  • There is no guarantee that the Units will generate returns in excess of the Prepaid Interest and Fees, during the Investment Term;
  • Additionally, in the event of an Investor requested Issuer Buy-Back or Early Maturity Event, you will not receive a refund of your Prepaid Interest or Fees. The amount received will depend on the market value of the Units which will be determined by many factors before the Maturity Date including prevailing interest rates in Australia and internationally, foreign exchange rates, agricultural commodity prices, the remaining time to Maturity, and general market risks and movements. Depending on these various factors there is a risk the buy-back price is zero at the time an Issuer Buy-Back is requested. Should this be the case then investors will incur a 100% loss of their investment if they proceed with completing the Issuer Buy-Back at that time. Investors should be aware the Units are designed to be held to Maturity and are not designed to be a trading instrument;
  • Gains (and losses) may be magnified by the use of a 100% Loan. However, note that the Loan is a limited recourse Loan, so you can never lose more than your Prepaid Interest Amount and Fees paid at Commencement.
  • Investors are subject to counterparty credit risk with respect to the Issuer and the Hedge Counterparty; and
  • the Units may mature early following an Early Maturity Event, including an Adjustment Event, Market Disruption Event or if the Issuer accepts your request for an Issuer Buy-Back.

 

Please refer to Section 2 “Risks” of the Master IM for more information.

 

For more information, please contact Sequoia at:
invest@sequoia.com.au and 02 8114 2222.

 

Units in Sequoia Agriculture Inflation – Series 1 are issued by Sequoia Specialist Investments Pty Ltd (ACN 145 459 936 ) (the “Issuer”) and arranged by Sequoia Asset Management Pty Ltd (ACN 135 907 550, AFSL 341506) (the “Arranger”). Investments in the Sequoia Agriculture Inflation – Series 1 can only be made by completing an Application Form attached to the Term Sheet IM, after reading the Term Sheet IM dated 25 May 2022 and the Master IM dated 11 April 2019 and submitting it to Sequoia. A copy of the IM can be obtained by contacting Sequoia Asset Management on or contacting your financial adviser. You should consider the Term Sheet & Master IM’ before deciding whether to invest in Units in Sequoia Agriculture Inflation – Series 1.  Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master IM.

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