Temasek unit to launch first listed bonds in Singapore backed by private equity funds

A man walks pass the Temasek Holdings office on February 16.
A man walks pass the Temasek Holdings office on February 16. PHOTO: ST FILE

SINGAPORE - A unit of Singapore investment company Temasek Holdings has launched a US$500 million (S$680.9 billion) issue of listed bonds backed by a portfolio of 34 private equity funds.

The product is the first of its kind in Singapore and issued by a vehicle called Astrea III, a wholly-owned subsidiary of Astrea Capital. Astrea Capital is in turn a unit of Azalea Asset Management, which is an indirect wholly-owned subsidiary of Temasek.

The aim is to attract a wider range of investors to co-invest in private equity funds, The Straits Times understands. While this bond issue is available only to institutional and accredited investors, the longer-term intention is to structure a product targeted at retail investors.

The bonds are based on 34 private equity funds valued at US$1.1 billion, including funds managed by industry heavyweights such as Blackstone Group, KKR, TPG Capital and Warburg Pincus.

These private equity funds are invested in more than 590 companies across sectors such as healthcare, consumer, industrials, and IT among others.

The bond issue is split into four classes of bonds targeted at investors with different risk and return profiles.

In addition to the US$500 million bond offering, the issuer will retain US$630 million in equity.

The Straits Times understands that yields on the bonds have not yet been determined, and will be worked out in the coming weeks as part of discussions between the issuer and potential investors.

Investors will have to put in a minimum of S$250,000 or US$200,000 depending on the class of bond they invest in - much less than the usual US$1 to $2 million required to invest in a private equity fund.

This bond issue is separate from the much-talked-about potential retail bond issue by Temasek, which has previously said it is open to issuing such bonds.