Temasek-linked Azalea sets pricing for Astrea 7 bonds

Azalea flowers. Photo by Nick Sweeney on UnsplashAzalea flowers. Photo by Nick Sweeney on Unsplash

Azalea Investment Management has set the pricing of three classes of private equity-backed bonds offered by the Astrea 7, the entities said in a press release Thursday.

The class A-1 bonds’ public offer will have a fixed coupon of 4.125 percent per annum, with S$280 million available at a minimum investment of S$2,000, the release said.

The class B bonds’ public offering priced at 6 percent per annum, with US$100 million available with a minimum investment of US$2,000, the release said.

“We are delighted to be returning with another series of Astrea PE Bonds, with Class B Bonds being made available to retail investors in Singapore for the first time. Both Class A-1 Bonds and Class B Bonds offer retail investors an opportunity to invest in investment grade bonds that provide private equity exposure and regular income,” Margaret Lui, CEO of Azalea, said in the statement.

Private-equity backed

Astrea is sponsored by Astrea Capital, which is a wholly owned subsidiary of Azalea Asset Management, which in turn is wholly owned by Singapore state-owned investment company Temasek Holdings. The Astrea Platform is a series of investment products based on private equity funds’ portfolios.

According to the preliminary prospectus, the bonds will be backed by a portfolio valued at US$1.91 billion with investments in 38 private equity funds and 982 investee companies, with an average weighted vintage of 2017. The portfolio is 77 percent invested in buyout funds, which have the strongest historical performance among private equity strategies, the prospectus said, adding the top three fund managers in the portfolio are Warburg Pincus, KKR and Permira. The remainder of the portfolio is in growth funds, the prospectus said.

The public offering of the class A-1 and B bonds followed a placement of S$246 million class A-1 bonds, US$175 million class A-2 bonds and US$100 million of class B bonds to institutional and accredited investors, Azalea said.

Placement meets solid demand

The interest rates for the placement were set via a bookbuilding process, with the class A-1 and B bonds paying the same rate for both retail and institutional investors, or 4.125 percent and 6 percent, respectively, the statement said. The class A-2 bonds priced at 5.35 percent, the statement said.

The placement met with good demand, racking up a combined orderbook of US$1.5 billion from 55 accounts, with 60 percent of the investor base coming from high-quality institutions, including insurers, asset managers, endowments and foundations, Azalea said. The remainder was distributed to accredited investors, the release said.

The class A-1 bonds will have a scheduled call date of five years and a maturity date of 10 years, with a 1 percentage point per annum step up if not redeemed on the call date, the release said.

For the class B bonds, the scheduled call date is six years, with a maturity date of 10 years, with a 1 percentage point per annum step up if not redeemed on the call date, the release said.

The public offer opens on 20 May and will close on 25 May, the statement said.

Credit Suisse (Singapore), DBS Bank and Standard Chartered Bank (Singapore) are the lead managers and underwriters for the offering, the release said.