Astrea 7 is the seventh issuance in the Astrea product line and offers three classes of investment grade bonds which amount to US$755mn. It is issued by Astrea 7 Pte. Ltd., a subsidiary of Astrea Capital 7 Pte. Ltd. (Sponsor). Astrea Capital is an indirect wholly-owned subsidiary of Azalea Management Pte. Ltd., which is indirectly wholly-owned by Temasek Holdings. These bonds are asset-backed securities that will be supported by the cashflows from a US$1.9bn portfolio invested across 38 private-equity funds. The Astrea 7 portfolio comprises buyout funds (77.1%) and growth equity funds (22.9%).
Risk management: The Astrea 7 PE portfolio has a weighted average age of approximately 5.3 years and is diversified across a total of 38 funds with 982 underlying investee companies managed by 29 GPs. The portfolio is considered to be mature and cash-generative as PE funds typically turn cashflow positive after 5 years due to divestments outpacing capital calls in the later years of a fund’s life. (Figure 1)
As mentioned above, 77.1% of the fund’s NAV is made up of buyout funds with the remaining 22.9% made up of growth equity funds. Historically, the buyout strategy has displayed more robust performance compared to other PE strategies which is illustrated in (Figure 2). The strategy provides fund managers with greater control over investee companies, allowing managers to make operational improvements and remain responsive to the global macroeconomic environment. Some reputable fund managers in this portfolio include Warburg Pincus (8.5% of NAV), KKR (6.6% of NAV) and Permira (6.5% of NAV). The portfolio is also highly diversifed, as with the largest investee company making up only 1.5% of the total portfolio’s NAV out of 982 companies. The bonds are also expected to obtain investment-grade ratings by Fitch and S&P.
With the significant demand seen for previous Astrea bonds, given Astrea VI’s aggregate offering was more than 6x subscribed, Astrea V at 6x and Astrea IV at more than 5x, similar or higher levels of participation is expected as retail investors can now invest into the Astrea 7 Class B bonds.