Temasek-owned Vertex Venture Holdings raising $450 million in debt

This is the first time Vertex is publicly issuing bonds.
This is the first time Vertex is publicly issuing bonds.PHOTO: THE STAR/ASIA NEWS NETWORK

SINGAPORE (THE BUSINESS TIMES) - Temasek-owned Vertex Venture Holdings, a private entity in the business of venture capital (VC), is issuing $450 million of seven-year senior unsecured bonds with a 3.3 per cent coupon, The Business Times understands.

This is the first time Vertex is publicly issuing bonds, a check on Bloomberg showed. The funds raised will be used for refinancing of existing borrowings, redemption of any redeemable preference shares, financing of investments, general working capital and general corporate purposes, going by an investor presentation seen by BT on Wednesday.

DBS Bank is the sole lead manager and book runner for the issuance, which is being done under Vertex's $2 billion multi-currency debt issuance programme.

The issuance was oversubscribed by about four times with an order book of over $1.1 billion, Vertex later said in a statement. This is the first Singapore-dollar denominated public corporate bond issued by a global venture capital investment holding company.

The bonds are expected to be issued on July 28. The issuance will diversify Vertex's sources of long-term patient capital and offer fixed-income investors exposure to the VC industry not previously seen in the SGD bond market, the company added.

Vertex Venture Holdings is an anchor investor in a global network of VC funds that invest in early-stage and growth-stage technology. It said its assets under management exceed US$4.5 billion (S$6.14 billion).

Each network fund raises a new fund every three years. "As these network funds continue to perform, their fund size will only increase over time, and Vertex Holdings will need to match the amount... Bond issuance is just another alternate source of capital besides using our own capital or raising money from other investors," Vertex Holdings' chief executive Chua Kee Lock told BT.

Other companies in the private equity business that have issued bonds include BlackRock and KKR.

In 2019, Vertex raised money for its Vertex Master Fund II from Japanese investors including the Development Bank of Japan, but through a limited partnership approach. Vertex's Master Funds provide anchor funding to its network of funds.

Tan Su Shan, group head of institutional banking at DBS, said: "This landmark transaction with Vertex opens up an alternate and complementary avenue for venture capital companies to tap debt capital markets to enhance their financial war chests, and this should further turbocharge their ability to identify and invest in more such high-potential companies that can make a positive difference."

There are six funds in Vertex's network, spanning China, Israel, South-east Asia and India, the US, early-stage biotech and medtech, and growth-stage global technology and healthcare.

Vertex-backed companies include Grab, intellectual property tech unicorn PatSnap, and business-to-business fintech startup Nium.

Bloomberg reported on July 6, based on sources, that Vertex was planning to raise funds for deal-making by listing a special purpose acquisition company or SPAC in Singapore.