Azalea Investment Management on July 30 launched its sixth series of private equity ( PE ) retail bonds, Astrea 9, amounting to US$345 million equivalent.

Under the public offer, Astrea 9, as the issuer, is offering S$380 million ( US$295 million ) of Class A1 bonds at a fixed interest rate of 3.4% per annum and US$50 million of Class A2 bonds at a fixed interest rate of 5.7% per annum.

Both the Class A1 and Class A2 bonds have a final maturity of 15 years, with a mandatory call at the end of five years that falls on August 8 2030 ( if the relevant conditions are met ). Azalea is increasing the amount of retail bonds available to the public by 37% in its Astrea 9 offering, compared with Astrea 8, to support the growing demand among individual investors.

The public offer follows the successful placement of S$235 million of the Class A1 bonds, US$150 million of the Class A2 bonds and US$100 million of the Class B payment-in-kind ( PIK ) bonds to institutional and accredited investors, which concluded on July 30. The placement tranche saw strong demand across all classes from high-quality institutions, such as endowments, insurance companies, corporates and asset managers. Each class of the bonds caters to investors with different risk preferences and investment horizons.

Allocations to these institutions made up close to 60% of the investor base for the placement. The combined placement orderbook amounted close to S$2 billion, reflecting the continuing support from institutional investors as well as the growing interest in PE investments among accredited investors.

As with the 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. The same interest rates set by these investors have been used for the retail offering.

The Astrea 9 PE bonds are backed by cash flows from a quality diversified portfolio. This portfolio consists of investments in 40 PE funds managed by 31 reputable managers, valued at approximately US$1.625 billion providing exposure to 1,086 companies at launch, diversified across vintages, sectors and geographies. The diversification and quality of the Astrea 9 portfolio, along with the structural safeguards in place, help mitigate risks for bondholders.

Of the PE funds, as of December 31 2024, 65.9% are based in the US, 26.5% in Europe and 7.6% in Asia. In terms of strategy, 82.9% are buyout and 17.1% growth equity. The weighted average fund age is 5.5 years

The Astrea platform has demonstrated the PE 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.

The Astrea platform, points out Chue En Yaw, the company’s CEO and CIO, offers investors exposure to PE 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.

“We remain committed to playing a meaningful role in shaping the financial future of investors in Singapore and empowering them with an investment option in an asset class traditionally reserved for institutions and high-net-worth investors.”

The new tranche of Class B PIK bonds is offered only to institutional and accredited investors in Singapore and other jurisdictions outside of the US, and are not available to retail investors in Singapore.

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. The Class B PIK bonds do not have a scheduled call date. Redemption may commence following the full redemption of the Class A1 and Class A2 bonds.

DBS, OCBC Bank and Standard Chartered ( Singapore ) were the lead managers and underwriters for the transaction.