Temasek unit’s retail PE bond offering oversubscribed 7.4 times

Photo: Bloomberg

Astrea IV Pte’s $90.5-million (S$121 million) Class A-1 bond offering for retail investors was oversubscribed 7.4 times, receiving about $665.6 million (S$890 million) in valid applications. These are the first retail bonds backed by cash flow from private equity investments.

The retail offering closed at noon on Tuesday and the results of the allocation process will be announced Wednesday evening, an announcement said. Astrea IV is a subsidiary of Azalea Asset Management, which is in turn a Temasek Holdings subsidiary.

“Further information will be shared at that time on the process for deposit into CDP accounts, listing and trading on the SGX, and refunds of funds for subscriptions that were not successfully allocated,” it added.

The Temasek unit is aiming to raise a total of $500 million through the PE bonds for retail investors. The three different classes of Astrea IV PE Bonds are Class A-1, A-2, and B, with interest rates of 4.35 per cent, 5.50 per cent and 6.75 per cent per annum, respectively. Each class caters to investors with different risk preferences and investment horizons.

The retail offer of Class A-1 bonds follows the successful placement of $90.5 million (S$121 million) of the Class A-1 Bonds, $210 million Class A-2 bonds and $110 million Class B bonds to institutional and accredited investors.

Temasek said the offering is aimed at enabling retail investors to invest in private equity bonds at an affordable price. Traditionally, private equity has largely been accessible to institutions and high net-worth individuals.

Astrea IV PE Bonds are backed by cash flows from a portfolio of investments in 36 underlying PE funds managed by 27 fund managers. These underlying PE funds have a net asset value of $1.1 billion and are invested in 596 investee companies globally across multiple sectors. According to the prospectus, about 86.1 per cent of the portfolio funds is invested in the buyout strategy, 12.3 per cent in growth equity and 1.6 per cent in private debt.

Astrea I and Astrea II both involved investment products based on portfolios of PE funds, while Astrea III introduced the first listed notes in Singapore backed by cash flows from PE funds.

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Temasek unit targets to raise $500m via PE-backed bonds for retail investors