Temasek Unit May Soon Bring PE Equity Products As Retail Bonds See Strong Demand

Singapore state investor Temasek unit Azalea Investment Managemen said its latest public offer for $132 million private equity backed retail bonds – Astrea V – received a strong response, being oversubscribed about 4.5 times.

Astrea V’s Class A-1 bonds that were offered to retail investors received nearly S$820 million in applications as at the close of offer, from a total of 30,816 applicants, about 4.5 times subscribed, an announcement said on Thursday.

The bonds were allocated to 28,358 retail applicants, it added.

Astrea V is the fifth in the series of PE-backed bonds for retail investors from Azalea. The PE Bonds are backed by cash flows from a $1.3-billion portfolio of investments in 38 PE funds.

The diversified portfolio provides exposure to 862 companies across a broad range of industry sectors covering IT, consumer discretionary, financials, industrials, healthcare and communication services. It has a similar structure and safeguards as the Astrea IV PE bonds that came to market last year.

The response from the retail investors in Singapore has come after Azalea had made a public offer for $132 million (S$180 million) Class A-1 private equity (PE) bonds at a fixed interest rate of 3.85 per cent each year for retail investors.

“Demand for the Astrea V PE Bonds was strong and we are pleased to have broadened our investor base,” said Margaret Lui, CEO of Azalea.

Step by step, Azalea hopes to offer opportunities for retail investors to invest in higher risk, higher returns classes of Astrea bonds. “We also hope to be able to make equity-type products based on PE available to retail investors in the future,” she added.

The retail offering of Astrea V Class A-1 Bonds followed the successful placement of three classes of the bonds to institutional and accredited investors, comprising: S$135 million of the Class A-1 Bonds; $230 million Class A-2 Bonds; and $140 million Class B Bonds.

The total amount of valid subscriptions received by the Issuer for all three classes of bonds, including both the placement and the public offer, was $4 billion, a subscription rate of 6.7 times the $600 million of bonds on offer in total.

The Astrea V Class A-1 Bonds are expected to commence trading on the Singapore Exchange at 9 AM on Friday, June 21. Once trading starts, investors may buy or sell the bonds over the SGX-ST, at the prevailing market price.