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6 Things Singaporean Needs To Know About Temasek Holdings First Retail Private Equity Bond, Astrea IV

Investors like you and myself can invest in Temasek’s first retail bond.

With big words like retail bond and Temasek involved, most Singaporeans would have shunned this topic as a whole.

Editor’s note: I would have totally skipped this topic, if not for my job at Seedly. So opinions here are of our own and we are not sponsored to write about this. 

 

Allow us the honour to try to make this topic as casual as possible.


 

Real user reviews on financial products

Invest in Temasek’s first retail bond to boost retirement income – Ho Ching

Here are some of the points touched on by Temasek chief executive Ho Ching, at the recent Stewardship Asia forum.

  • People in Asia are living longer, which makes retirement planning and funding even more important.
  • Drawing attention to buying a property where it takes up a huge amount of savings and lacks diversification.
  • Instruments like Real estate investment trust (REIT), however, allows investors like you and me to invest in different kind of property assets in small quantities.
  • Temasek now wants to do the same for private equity funds.
  • Funds are usually not accessible to the majority of retail investors due to high barriers to entry (too expensive to invest!)
  • Hence, this newly created retail bond can help retail investors with it, just like REIT for real estate investing.

Here are 6 things we need to know about Astrea IV Bond

Who on earth is Astrea Capital IV Pte. Ltd?

As seen from the name, Astrea IV Bond is sponsored by Astrea Capital IV Pte. Ltd.

Astrea Capital IV Pte. Ltd is a subsidiary of Azalea Asset Management Pte. Ltd.

Azalea Asset Management Pte Ltd is ultimately owned by Temasek Holdings (Private) Limited.

How much to invest?

Astrea IV has 3 tranches, in hope of raising a total of US$500 million in total. That works out to be about S$673 million.

The 3 tranches are

  • Class A-1 bonds where they plan to raise S$242 million
  • Class A-2 bonds where they expect to raise US$210 million
  • Class B bonds with an expectation of US$110 million

For normal investors like us, Class A-1 bonds will be our main focus. It will be available for our subscription through ATMs at a minimum investment of S$2,000. Plus, it is the least risky compared to the rest of the classes.

Interest yield for Astrea IV Bond

The interest yield for Astrea IV differs with each tranche.

For class A-1 bonds which we can invest in, the guidance is a yield of 4.35%.

Maturity of Astrea IV Bond

Class A-1 and A-2 of Astrea IV has a scheduled call date of 5 years and a legal maturity date of 10 years.

This means what Astrea can pay investors a call premium anytime after 5 years and investors will miss out about 5 years of interest payment. Well, 5 years of 4.35% sounds good too!

Should I invest in Astrea IV, what am I investing in?

Class A-1 is given an expected preliminary rating of A(sf) by S&P and Fitch Ratings.

Astrea IV’s portfolio of private equity consists of 36 funds, diversified by vintage, sector, geography, and strategy. These 36 private equity funds account for a net asset value (NAV) of USD1.1 billion.

How to invest in Astrea IV?

The public tranche will be open for subscription on 6 June 2018, 9am, all the way till 12 June 2018.

One can apply for it by going to the ATM and apply.

Read also: Keep calm and invest in Singapore Savings Bond (SSB)


Further Reading: Pros and Cons of Astrea IV

Before you invest, we weigh the pros and cons of Astrea IV. It is always good to know the good and the risk which you will be undertaking when investing.

To help you understand better, it will be good to understand the structure of Astrea IV Pte. Ltd.

Pros: Structure of Astrea IV

transaction structure of Astrea IVsource: S&P Global Ratings

As seen above, DBS Bank acts as a capital call facility. This means that in cases where cash flow is in shortage, DBS will come in to provide short-term funding.

DBS Bank also acts as a liquidity facility to inject liquidity in cases where there is a shortage of liquidity to pay for interest or expenses.

Pros: Portfolio of Astrea IV is well diversified

Portfolio is well diversified. The 36 funds have 596 underlying investments across sectors and regions.

Below are some pieces of information on the characteristics of the portfolio.
Astrea IV NAV by Geography
Astrea IV portfolio NAV by sector

Pros/Cons: Capabilities of manager

The manager of Azalea Investment Management has extensive experience in the industry. The connection between Temasek and Azalea is definitely an additional benefit. The only con is that it lacks a track record.

 

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