A unit of Singapore government-owned investment company Temasek Holdings is seeking to raise almost US$600 million through the issuance of additional private equity-backed bonds that also targets retail investors.
Azalea Asset Management, an indirect wholly-owned subsidiary of Temasek, is offering three classes of PE-backed bonds in a similar transaction to the print last year in which it raised US$501 million. To be issued through Astrea V Pte. Limited, these bonds are asset-backed securities backed by cash flows from a quality diversified portfolio of PE funds managed by reputable GPs.
The Class A-1 of the bonds are expected to raise S$315 million (US$228 million), and are scheduled to be redeemed in five years. A portion of these bonds will be offered to retail investors for a minimum investment of S$2,000.
The Class A-2 and Class B bonds expect to raise US$230 million and US$140 million, respectively, and will be offered only to institutional and accredited investors. If any of the Class A-1 and Class A-2 bonds are not redeemed after five years, there will be a one-time 1% per annum step-up in interest rate
Astrea V is a private equity collateralized fund obligation wholly-owned by the sponsor Astrea Capital V Pte. Limited, which in turn is an indirect wholly-owned subsidiary of Azale.
The transaction portfolio is made up of 38 fund investments with a total net asset value of US$1.324 billion as at March 31 2019. The fund investments are diversified across vintages with a focus on buyout and growth equity strategies.
As of end-2018, the fund investments were invested in 862 investee companies, covering various regions and sectors.
Azalea invests in PE funds with a focus on the development and innovation of new investment platforms and products to make private equity more accessible to a broader group of investors. The Astrea platform is one such innovation that brings retail investors in Singapore closer to private equity.
The Astrea platform is a series of investment products based on diversified portfolios of PE fund, with the first product introduced in 2006. There are now four products in the series to date, with Astrea V being the latest addition.
In 2018, Astrea IV offered half of the Class A-1 bonds, or S$121 million, to retail investors in Singapore. The bonds carried an interest rate of 4.35% per annum and were to be redeemed in five years.
Astrea IV was a groundbreaking transaction as it achieved Azalea’s vision of broadening the investor base to retail investors. It was the first listed retail bonds in Singapore backed by cash flows from PE funds.
Credit Suisse, DBS and Standard Chartered are the lead managers and underwriters of the Astrea V PE-backed bonds, with PhillipCapital and UOB KayHian acting as sub-placement agents.