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Straits Times
4 days ago
- Business
- Straits Times
Latest Astrea bonds over 3 times subscribed, drawing more than $3.4 billion in demand
Sign up now: Get ST's newsletters delivered to your inbox Fund manager Azalea increased the bond's retail tranche by 37 per cent compared to previous issuance to meet demand. SINGAPORE - Investor demand for the latest Astrea private equity (PE) bonds has surged, with total subscriptions surpassing $3.4 billion across all three classes – 3.4 times the total US$780 million (S$1 billion) issued under both the public and placement tranches. In a statement on Aug 7, fund manager Azalea Investment Management – which offered the Astrea 9 bonds – described it as its largest retail order book to date, underscoring strong investor confidence in the platform's track record and credit quality. The public offers for Class A-1 and Class A-2 bonds alone drew over $1.5 billion in valid applications – 3.5 times the combined $380 million and US$50 million offered. To meet growing demand from individual investors, Azalea increased the retail tranche in Astrea 9 by 37 per cent compared to the previous issuance, Astrea 8. For the Singapore dollar-denominated Class A-1 bonds, Azalea received $1.2 billion in valid applications from 34,969 applicants, with more than 82 per cent of the bonds allocated to those who applied for $50,000 or less. The US dollar-denominated Class A-2 bonds saw US$280 million in valid applications from 12,592 applicants, with close to 80 per cent of the bonds allocated to those who applied for US$50,000 or less. 'We are truly heartened by the overwhelming response to the Astrea 9 public offers, which resulted in the largest retail orderbook we have seen to date,' said Chue En Yaw, chief executive officer and chief investment officer of Azalea. 'With the expanded size of the public offers, our aim was to meet growing retail demand for Astrea PE Bonds – and we are encouraged by the strong participation from investors.' Azalea, an indirect subsidiary of Temasek, also stepped up investor outreach with explainer videos, seminars and a hybrid session held on Aug 4 to help retail investors better understand the offering. More retail engagement is planned through its annual Astrea Investor Day. Top stories Swipe. Select. Stay informed. Asia Cambodia, Thailand agree on Asean observers monitoring truce, but fundamental differences remain Business Who loses the most from Trump's tariffs? Who wins? Singapore Flying greener will come at a price, industry players warn Singapore Liquor licences for F&B, nightlife venues extended to 4am in Boat Quay, Clarke Quay Opinion At 79, Liew Mun Leong has no time to be sentimental Singapore Student found with vape taken to hospital after behaving aggressively in school; HSA investigating Singapore Chikungunya cases in Singapore double; authorities monitoring situation closely Singapore CDC and SG60 vouchers listed on e-commerce platforms will be taken down: CDCs
Business Times
4 days ago
- Business
- Business Times
Azalea's Astrea 9 bonds over 3 times subscribed, draw more than S$3.4 billion in demand
[SINGAPORE] Investor demand for the latest Astrea private equity (PE) bonds has surged, with total subscriptions surpassing S$3.4 billion across all three classes – 3.4 times the total US$780 million (S$1 billion) issued under both the public and placement tranches. In a statement on Thursday (Aug 7), fund manager Azalea Investment Management – which offered the Astra 9 bonds – described it as its largest retail orderbook to date, underscoring strong investor confidence in the platform's track record and credit quality. The public offers for Class A-1 and Class A-2 bonds alone drew over S$1.5 billion in valid applications – 3.5 times the combined S$380 million and US$50 million offered. To meet growing demand from individual investors, Azalea increased the retail tranche in Astrea 9 by 37 per cent compared to the previous issuance, Astrea 8. For the Singapore dollar-denominated Class A-1 bonds, Azalea received S$1.2 billion in valid applications from 34,969 applicants, with more than 82 per cent of the bonds allocated to those who applied for S$50,000 or less. The US dollar-denominated Class A-2 bonds saw US$280 million in valid applications from 12,592 applicants, with close to 80 per cent of the bonds allocated to those who applied for US$50,000 or less. 'We are truly heartened by the overwhelming response to the Astrea 9 public offers, which resulted in the largest retail orderbook we have seen to date,' said Chue En Yaw, chief executive officer and chief investment officer of Azalea. 'With the expanded size of the public offers, our aim was to meet growing retail demand for Astrea PE Bonds – and we are encouraged by the strong participation from investors.' Azalea also stepped up investor outreach with explainer videos, seminars and a hybrid session held on Aug 4 to help retail investors better understand the offering. More retail engagement is planned through its annual Astrea Investor Day. The bonds will begin trading on the Singapore Exchange on Aug 11, 9 am.
Business Times
30-07-2025
- Business
- Business Times
Astrea 9 PE-backed bonds offer attractive yields for retail investors
[SINGAPORE] Investors hungry for a yield asset with a stable return profile have a chance to invest in the latest issuance of private equity (PE)-backed bonds. Astrea 9 bonds, the latest offering by Azalea Investment Management, will open for retail subscription on Thursday (Jul 31). The public may subscribe for S$380 million worth of the highest-rated Singapore dollar Class A-1 bonds, with a fixed coupon of 3.4 per cent a year. Another US$50 million worth of Class A-2 US dollar bonds are also open for subscription, with a fixed coupon of 5.7 per cent a year. Astrea 9's retail portion is the largest to date of the five previous Astrea issuances. In response to growing public demand, fund manager Azalea Investment Management raised the amount available for public subscription by 37 per cent compared to Astrea 8. 'We're pleased to return with a much larger retail tranche in Astrea 9 to support increased investor demand for suitable and resilient investment products,' said Chue En Yaw, chief executive officer and chief investment officer of Azalea. 'We remain committed to playing a meaningful role in shaping the financial futures of investors in Singapore and to empowering them with an investment option in an asset class traditionally reserved for institutions and high-net-worth individuals.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Azalea Group is a subsidiary of Seviora Holdings, which is in turn owned by Temasek. Azalea's mission is to democratise access to the PE asset class among retail investors. The Astrea bond issuance programme is designed with safeguards to prioritise the payment of coupon and principal for retail tranches, including a reserve account to set aside cash to redeem the bonds, and a liquidity facility to fund expenses. The Astrea platform has built a track record to date of full redemptions for three previous issuances and a history of ratings upgrades. Astrea 9's public offer follows the successful placement of S$235 million of Class A-1 bonds, US$150 million of Class A-2 bonds and US$100 million of Class B 'Payment in Kind' (PIK) bonds to institutional and accredited investors, which concluded on Wednesday. Azalea said demand was strong across all classes from high-quality institutions such as endowments, insurance companies, corporates and asset managers. Allocations to the institutions accounted for close to 60 per cent of the investor base for the placement. The combined placement order book of close to S$2 billion represents a 3.6 times subscription rate. The latest issuance is backed by cash flows from a portfolio of 40 PE funds managed by 31 reputable managers, valued at around US$1.62 billion. It provides exposure to more than 1,000 companies diversified across vintages, sectors and geographies. The portfolio has a weighted average age of five to six years. Justin Keh, Azalea's managing director for investment, noted that this is at the point of a PE fund's 'J-curve' 'when funds exit the investment period and enter the monetisation phase'. 'We expect the portfolio to be highly cash-generative during the life of the bonds, he added. This marks the first time that Astrea featured a subordinated tranche of Class B PIK bonds, which will earn an interest rate of 7.35 per cent per annum, to be accrued every six months. With PIK bonds, the accrued interest payable at the end of each distribution period is added to the original principal and forms part of the principal amount, compounded over time. Class A-1 and A-2 bonds are expected to be rated investment grade by Fitch, at A+sf and Asf, respectively. Class B bonds are expected to be rated BBBsf. Class A-1 and A-2 bonds have final maturity of 15 years, with a mandatory call at the end of five years on Aug 8, 2030, subject to the fulfilment of certain conditions. Class B PIK bonds do not have a scheduled call date, but redemption can begin following the full redemption of Class A-1 and A-2 bonds. The coupon rates, determined through a competitive book-building process among institutional investors, are regarded as competitive relative to similarly rated bonds. Interest rates have been declining for lower-risk options such as six-month Treasury bills (T-bills), where the latest cut-off yield was 1.79 per cent , compared to 2 per cent in June. The Jul 1 issuance of the Singapore Savings Bond (SSB) carries an average annual interest rate of 2.49 per cent over 10 years. Speaking on Class A-1 bonds, Elayne Ho, Standard Chartered Bank's executive director of capital markets, said: 'Institutional investors are going to look at where other Temasek-linked, single-A rated issuances are trading – currently at sub-3 per cent.' Retail investors, she added, will also look at T-bills and fixed-deposit rates, and in this context the Class A-1 bonds' 3.4 per cent rate is 'pretty compelling'. Class A-2 US dollar bonds, at 5.7 per cent, also '(stack) up as fair in comparison to senior A-rated bonds', Ho noted. 'And when we also look at subordinated Tier-2 capital (bonds), which are trading at low- to mid-5 per cent, they are lower than Class A-2 bonds.' Colin Low, portfolio manager of the Bondsupermart's global fixed-income team, also believes Astrea 9 is attractive across the three classes of bonds. 'Considering the declining yield in the SGD bond space, Class A-1 notes will be a good option to lock in above-3 per cent yield at a strong credit rating, and pocket around 160 basis points in yield pickup over the five-year Singapore Government Securities, without taking on significant credit risk,' he said. 'Class A-2 notes will also be a good option for investors looking for a durable USD income of around 5 to 6 per cent yield, over an intermediate period,' he added. 'Overall, we think the appeal of Class B PIK notes comes from the high 7.35 per cent yield which provides interest similar to that of high-yield bonds. This gives investors the opportunity to augment the yield of their bond portfolio, without taking on significant credit risk, as compared to investing in a high-yield bond.' Low also said Azalea's strong track record of redeeming past issuances provides some reassurance, 'despite no maturity 'floor' and a lengthy tenor'. 'We find the Class B PIK notes more suitable for investors with a greater risk appetite who are looking for higher yields, and/or those who are comfortable being 'locked in', without actual income for several years.' The public offer will open at 9 am on Thursday, and close at 12 pm on Aug 6. Astrea 9 bonds are expected to be issued on Aug 8. Trading of Class A-1 and A-2 bonds is expected to start on Aug 11.
Business Times
25-04-2025
- Business
- Business Times
Azalea's next challenge: Private equity investing for the mass affluent
[SINGAPORE] Azalea Investment Management, which pioneered the Astrea series of Singapore Exchange-listed private equity (PE) backed bonds, has arguably fulfilled its mission of democratising retail investors' access to PE – or a structure close to it. Over the past decade, it has raised a total of US$3.6 billion for Astrea bonds, including nearly S$1.3 billion in retail subscriptions. Three of the bond issuances have been fully redeemed. But now Azalea, a Temasek Group company, has set its sights even broader. Its ambition is to extend direct co-investing in PE portfolios to an even wider audience than accredited or sophisticated investors. It hopes the mass affluent, widely defined as those with between US$100,000 and US$1 million in investable assets, will be allowed to invest. It is also working on offering open-ended or semi-liquid funds, which typically have regular redemption windows, subject to limits. Azalea's PE co-investment platform is called Altrium, which has raised a total of about US$2.3 billion in assets from accredited accredited investors and institutions to date. This includes the recent successful first closing for Altrium PE Fund III, which attracted commitments of US$262 million. Altrium enables investments in the equity of private companies. This offers higher growth potential but at a higher risk. Investors generally have to remain invested over the funds' life. In contrast, Astrea comprises bonds collateralised by portfolios of PE funds. Distributions from the underlying funds are paid out as coupons to bondholders, who receive their principal at maturity. Bondholders do not participate in the underlying companies' growth. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Monetary Authority of Singapore is currently seeking public feedback on a framework to enable retail investors to access private markets investments. Interest in private markets has intensified as investors seek sources of return uncorrelated with stocks and bonds. Traditional asset managers, who grapple with fee compression, are also muscling in. Private market fund fees are more lucrative than unit trusts' fees. Apollo and State Street recently listed an exchange-traded fund in the US with an allocation to private assets. Bond giant Pimco is set to launch a European private credit fund. Azalea itself recently completed a leadership transition. Margaret Lui, who has been chief executive since the firm was set up in 2015, has retired. She remains on the investment committees of existing Altrium funds. Chue En Yaw, who joined in 2018, is now chief executive officer, and retains his role as chief investment officer. Lui, a Temasek veteran, led the development of the Astrea bond programme, which took pains to mitigate the risk of PE investments for the man in the street. Safeguards typically include the prioritisation of coupon payments for the retail tranche, a reserve account to set aside cash to redeem the bonds, and a liquidity facility to fund expenses. The firm is confident about the resilience of the PE asset class and the Astrea bonds, despite the market upheaval over US President Donald Trump's tariffs. Chue said: 'We are still in early days, and the situation remains highly fluid. We're monitoring the situation closely and actively engaging our fund managers to assess the potential impact of the latest tariff changes on the underlying portfolio companies. 'While tariffs could impact PE investments and exit activity in the short term, it is worth noting that PE has historically demonstrated resilience across market cycles, including the dotcom crisis, global financial crisis and Covid-19.' The firm is convinced that PE can help enhance returns for retirement portfolios as well as provide diversification benefits. Lui said: 'I'm very fortunate to have this mandate to do good, and make it work in a commercial sense. The entire team is passionate about financial inclusivity and enabling people to have access to this asset class to invest for their future… The holy grail is to bring equity investing to retail investors. The regulator is quite understanding in that respect; the world is moving towards that. 'We'll still provide Astrea bonds and Altrium PE funds so investors can have the whole array of risk-reward options to give them a chance to build for their future.' Lui and Chue believe some retail investors are ready to co-invest in PE. Lui said: 'Over the past seven years investors in Astrea have graduated to a level where they're very curious about equity. We want to make sure people understand… After many iterations of Astrea PE bonds, perhaps it's time that investors can, within a certain framework, get access or invest in the equity. I do believe in time they will be allowed to.' Chue said: 'Our philosophy has been to reach the mass affluent. One of the ways we measure success is to focus on the smaller accounts. We want more people to benefit from PE.' The firm, he said, has sought to address some of the pain points of investing in PE. One is the 'J curve', where returns in the early years of a fund are poor or negative due to investment costs and the time needed for underlying investments to mature. To mitigate this, Azalea commits an amount to seed the portfolio, in what is termed a 'warehoused portfolio', which reduces the 'blind pool' risks. The warehoused portfolio allows investors to enter at a later stage and potentially enjoy a markup in value, which reduces the negative effects of the initial years of the J curve. Altrium funds also comprise a diversified mix of primary and secondary investments. Secondaries refer to existing PE assets put on the market by primary investors. Altrium also has relatively lower minimum commitments and shorter holding periods. Capital calls are made on an annual basis which enables investors to better manage their own capital and cash flows.
