Azalea Investment Management, which is indirectly backed by Temasek, has announced the issuance of Astrea 9 class A-1 bonds and class A-2 bonds for subscription by the public in Singapore on July 30.
Under the public offer, Astrea 9 is offering $380 million of class A-1 bonds at a fixed interest rate of 3.4% per annum.
Additionally, they are issuing US$50 million ($64 million) of class A-2 bonds at a fixed interest rate of 5.7% per annum.
The interest rates for the respective classes of Astrea 9 private equity (PE) bonds were determined through a competitive bookbuilding process with institutional investors. The same interest rates have been used for the retail offering, Astrea says.
This is the sixth series of PE retail bonds to be listed on the Singapore Exchange (SGX). The PE bonds issued by Astrea 3, Astrea 4 and Astrea 5 have also been fully redeemed.
Azalea has also increased the amount of retail bonds available to the public by 37% compared to the previously released Astrea 8 tranche to cope with growing demand amongst individual investors.
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The bonds are backed by cash flows from a quality diversified portfolio which consists of investments in 40 PE funds with exposure to 1,000 diverse companies across vintages, sectors and geographies, which help to mitigate risks. The funds are valued at approximately US$1.625 billion ($2.09 billion).
Offer details
The class A-1 bonds are expected to be rated “A+sf” by Fitch Ratings, whereas class A-2 bonds are expected to be rated “Asf”, both investment-grade credit ratings.
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Both types of bonds are available for retail subscription in Singapore.
The Class A-1 bonds have a minimum subscription amount of $2,000, while the class A-2 bonds have a minimum subscription amount of US$2,000 ($2573).
Subscribers to the US dollar-denominated class A-2 bonds will pay in Singapore dollars at the fixed US-dollar exchange rate of US$1 to $1.2852.
Both class A-1 and class A-2 bonds have a final maturity of 15 years with a mandatory call at the end of 5 years on 8 August 2030, provided relevant conditions are met.
The relevant conditions include sufficient cash accumulated in the reserve amount, with no credit facility loan outstanding.
If on the scheduled call date, there are sufficient reserves to redeem the class A-1 bonds only and not the class A-2 bonds, the class A-1 bonds will be redeemed and the class A-2 bonds will take place at the next distribution date when the class A-2 call date exercise conditions are met.
If the class A-1 bonds and class A-2 bonds are not redeemed on the scheduled call date, their annual interest rates will step up by 1.0% to 4.4% per annum and 6.7% per annum respectively.
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Successful placement
The public offer follows the successful placement of $235 million class A-1 bonds, US$150 million ($193 million) of class A-2 bonds and US$100 million ($128 million) of class B payment-in-kind (PIK) bonds to institutional and accredited investors.
Class B PIK bonds are denominated in US dollars, and are only offered to institutional and accredited investors in Singapore and other jurisdictions outside the US. They are not available to retail investors in Singapore, and are expected to receive a “BBBsf” rating by Fitch.
The bonds saw strong demand across a multitude of high-quality institutions such as endowments, insurance companies, corporates and asset managers. Allocations to institutional investors made up close to 60% of the investor base for the placement.
The placement orderbook of close to $2 billion reflects continual interest from both institutional investors as well as a growing interest in private equity among accredited investors.
Chief executive officer (CEO) and chief investment officer (CIO) of Azalea Chue En Yaw expressed that they were “pleased” to offer a “much larger retail tranche” in Astrea 9 to support increased investor demand for “suitable and resilient investment products”.
“The offering of class B PIK bonds is part of Azalea’s phased strategy to continuously innovate and develop the Astrea platform as it offers accredited investors an opportunity to invest in a more junior tranche with a higher risk and return profile closer to that of private equity,” he adds.
He emphasises that Astrea is “committed” to empowering investors in Singapore by providing access to an investment option in an asset class "traditionally reserved for institutions and high-net-worth investors”.
The public offer will open from 9 am on July 31 and will close at 12 noon on Aug 6.
The Astrea 9 PE bonds are expected to be issued on Aug 8.
The class A-1 bonds and class A-2 bonds are expected to list and start trading on the SGX Mainboard on Aug 11 in board lot sizes of $1000 and US$1000 ($1,286) respectively.
