Astrea 9 Pte. Ltd. and Azalea Investment Management Pte. Ltd have launched the Astrea 9 Class A-1 and Class A-2 bonds for public subscription in Singapore. This marks the sixth series of private equity retail bonds to be listed on the Singapore Exchange, according to a statement released on Wednesday.
Astrea 9 Pte. Ltd. is an indirect wholly owned subsidiary of Azalea Asset Management Pte. Ltd (AAM), which is in turn wholly owned by Temasek’s Seviora Holdings.
Under the public offer, Astrea 9 is offering S$380 million of Class A-1 Bonds at a fixed interest rate of 3.4% per annum, and $50 million of Class A-2 Bonds at a fixed interest rate of 5.7% per annum.
Furthermore, Azalea is increasing the amount of retail bonds available to the public by 37% in Astrea 9 compared to Astrea 8, to support growing demand among individual investors.
The public offer follows the successful placement of S$235 million of Class A-1 Bonds, $150 million of Class A-2 Bonds, and $100 million of Class B Payment-in-Kind (PIK) Bonds to institutional and accredited investors, which concluded earlier on Wednesday.
The placement tranche drew strong demand from institutions such as endowments, insurers, corporates, and asset managers. Allocations to these institutions made up close to 60% of the investor base for the placement. The order book of nearly S$2 billion reflects continued institutional support and growing interest in private equity investments among accredited investors.
As with previous Astrea issuances, the interest rates for the respective Classes of Astrea 9 PE Bonds were determined through a competitive bookbuilding process with institutional investors. These same interest rates have been applied to the retail offering.
The Astrea 9 PE Bonds are backed by cash flows from a diversified portfolio of 40 private equity funds managed by 31 reputable managers, valued at approximately $1.625 billion. At launch, the portfolio provides exposure to over 1,000 companies across multiple vintages, sectors, and geographies.
“Our Astrea Platform offers investors exposure to private equity with a steady income stream through a bond structure. 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,” said Chue En Yaw, Chief Executive Officer and Chief Investment Officer, Azalea.
The executive added the firm remains committed to playing a meaningful role in shaping the financial futures of investors in Singapore, empowering them with an investment option in an asset class traditionally reserved for institutions and high-net-worth investors.
The Astrea platform has demonstrated the private equity industry’s resilience to short-term volatilities, with its ability to fulfil its obligations to bondholders through varying market conditions.
Since issuance, the Astrea PE bonds have received multiple credit rating upgrades, which attest to the strong credit quality of the bonds. The PE bonds issued by Astrea III, Astrea IV and Astrea V have also been fully redeemed, stated the executive.
The Astrea 9 PE Bonds comprise three different tranches of PE bonds: Class A-1, Class A-2 and Class B PIK, with interest rates of 3.4%, 5.7% and 7.35% per annum, respectively. Each class caters to investors with different risk preferences and investment horizons.
The Class A-1 Bonds and Class A-2 Bonds are expected to be rated `A+sf’ and `Asf’ by Fitch Ratings, Inc (`Fitch’), respectively. These are investment-grade credit ratings, and both the Class A-1 Bonds and Class A-2 Bonds are available for retail subscription in Singapore.
The Class A-1 Bonds have a minimum subscription amount of S$2,000, while the Class A-2 Bonds have a minimum subscription amount of US$2,000. Subscribers to the Class A-2 Public Offer, which is US dollar-denominated, will pay in Singapore dollars at the fixed US-dollar exchange rate of 1 US dollar to 1.285 Singapore dollar.
