Sequoia Dispersion – Series 8

Dispersion – Global Energy Transformation – Series 8

Green Energy vs Traditional Energy

The Units in Dispersion – Global Energy Transformation – Series 8 offer investors the ability to gain exposure to the Dispersion of a Reference Basket of listed US Shares (each an “Underlying”) during the period from the Commencement Date to the Maturity Date (being a period of approximately 18 months) based on the full leveraged Investment Amount. Investment in the Units is by way of a 100% LVR limited recourse loan, with Investors only being required to pay an Application Fee and Prepaid Interest following a successful application for Units.

The Reference Basket consists of US listed Shares which have been characterised by the Issuer as:

  • Green Energy Stocks being companies playing a key role in improving clean energy efficiency. This Includes companies involved in the renewable energy generation/distribution sectors such as a solar panels producer (ENPH), diesel and natural gas engines manufacturer (CMI), industrial atmospheric and specialty gases producer (APD), clean electricity distributor (NEE) and semiconductors (AMD);
  • Traditional Energy Stocks being companies playing a key role In the Oil & Gas market as producers, refiners and transporters.

The Units provide investors with a potential uncapped Performance Coupon at Maturity based on the full leveraged investment amount depending on the performance of Dispersion of the Reference Basket during the Investment Term provided the realised level of Dispersion at Maturity is greater than the Hurdle. The Performance Coupon is also adjusted for changes in the AUD/USD exchange rate during the Investment Term.

Reference Basket:

Reference BasketBloomberg SectorBloomberg GroupBloomberg CodeUnderlying
Green Energy StocksEnergyEnergy-Alternate SourcesENPH UQ EquityEnphase Energy Inc
Consumer, CyclicalAuto ManufacturersCMI UN EquityCummins Inc
Basic MaterialsChemicalsAPD UN EquityAir Products and Chemicals Inc
UtilitiesElectricNEE UN EquityNextEra Energy Inc
TechnologySemiconductorsAMD UW EquityAdvanced Micro Devices Inc
Traditional Energy StocksEnergyOil & GasCVX UN EquityChevron Corp
EnergyOil & GasXOM UN EquityExxon Mobil Corp
EnergyOil & GasCOP UN EquityConocoPhillips
IndustrialElectronicsHON UN EquityHoneywell International Inc
EnergyOil & GasMPC UN EquityMarathon Petroleum Corp

Summary of the key features

DispersionThe dispersion of a basket of securities is typically measured by how much the return of each individual security in the basket differs, in absolute terms from the average return of the overall basket over a given period of time. Each of these return differentials are averaged and the greater the average, the higher the measure of dispersion

Refer to the Formulae & Calculations section of the PDS for a precise formula for calculating Dispersion.
Potential Performance Coupon Yes, the potential for one uncapped Performance Coupon based on the realised level of Dispersion at Maturity LESS the Hurdle, as adjusted for changes in the AUD/USD exchange rates
Hurdle*The Hurdle is determined by the Issuer on the Commencement Date. As at the date of the PDS the Hurdle would be 35%. The Issuer will not proceed with the issue of Units if the Hurdle cannot be set at or below 35% on the Commencement Date
Currency ExposureYes, the potential Performance Coupon at Maturity is adjusted for changes in the AUD/USD exchange rate during the Investment Term
Limited recourse LoanYes
Investment Term18 months
Annual Interest Rate on Loan (payable for the full 18 months in advance)4.3% p.a.(6.45% payable upfront for the full 18 month Investment Term)
Application Fee1.1% including GST
Total Investment cost for the full 18 month period7.55%
Break- Even Level Performance Coupon at Maturity42.55%
Margin CallsNo
SMSF EligibilityYes
Commencement Date/Issue Date01 March 2021 or as soon as reasonably practicable thereafter as determined by the Issuer and as notified to you.
Maturity Date01 September 2022

*Subject to change depending on the Hurdle Rate on the Commencement Date.

Downloads

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

Sequoia Dispersion – Series 8 Performance

DateReference asset (Realized dispersion)Indicative Unit value 1Gross Performance 2
31-Mar-20214.62%$1.000%
30-Apr-20216.65%$1.000%
28-May-20217.80%$1.000%
30-Jun-20216.22%$1.010%
30-Jul-20216.78%$1.000%
31-Aug-20216.78%$1.0030%
30-Sep-20219.95%$1.000%
29-Oct-202110.63%$1.0100%

1 – This represents an indicative level for unwinding your investment on the reporting date and is an indication of the market value of the investment.

2 – Gross Performance only becomes positive once the reference asset performance level exceeds the hurdle level of 35%

Key risks include:

  • Your return (including any Performance Coupon) is affected by the performance of the Dispersion of the Reference Basket (US listed Shares) and whether this is greater than the Hurdle at Maturity. There is no guarantee that the Dispersion of the Reference Basket will perform well.
  • There will be no Performance Coupon payable if the Dispersion of the Reference Basket is below the Hurdle at Maturity.The potential Performance Coupon is determined by reference to the Dispersion of the Reference Basket, the Hurdle as well as 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.
  • 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 an Early Maturity Event you will not receive a refund of your Prepaid Interest or Fees.
  • 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 will never be required to pay more than the Prepaid Interest Amount and Fees 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 PDS for more information.

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

Units in Sequoia Dispersion – Series 8 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 Dispersion – Series 8 can only be made by completing an Application Form attached to the Term Sheet PDS, after reading the Term Sheet PDS dated 09 February 2021 and the Master PDS dated 14 August 2017 and submitting it to Sequoia A copy of the PDS can be obtained by contacting Sequoia Asset Management on or contacting your financial adviser. You should consider the Term Sheet & Master PDS’ before deciding whether to invest in Units in Sequoia Dispersion – Series 8.  Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS