Temasek to return with Astrea IV securitisation – exclusive

Temasek, Singapore’s state-owned investment company, is preparing to launch its latest Astrea collateralised fund obligation, Secondaries Investor has learned.

The S$275 billion ($202 billion; €173 billion) investment firm is using its wholly owned subsidiary Azalea Asset Management to launch Astrea IV, according to three sources familiar with the matter. The vehicle was registered with Singapore’s Accounting and Corporate Regulatory Authority in August.

The structure of Astrea IV and the timing of its launch are yet to be determined, two of the sources said.

Temasek has been acquiring stakes on the secondaries market and plans to use these in Astrea IV, according to two of the sources. These include interests in buyout funds it bought from British Columbia Investment Management Corporation, Canada’s largest institutional investor, as Secondaries Investor reported in October.

Astrea I and Astrea III were launched in 2006 and 2016 respectively as private equity-backed listed bonds. Astrea I was backed by 46 private equity funds while Astrea III, which issued $510 million-worth of bonds across four classes, contained stakes in 34 private equity funds managed by 26 general partners including KKR, Blackstone and Warburg Pincus.

Astrea III, which was more than eight times oversubscribed, had a net asset value of $1.1 billion and had $300 million of fund investment distributions as of 31 March, according to its latest annual report. Astrea II was a private transaction.

In a collateralised fund obligation an equity holder sells a portfolio to a new vehicle with a new manager, and the original owner can select which kinds of notes it wants to hold and extract liquidity by selling the equity to a new buyer.

The original holder can also keep the equity and instead issue debt to buyers through publicly listed bonds, as Temasek did with Astrea III through subsidiary entities.

Securitisations of portfolios largely disappeared after the global financial crisis of 2008-2009 until Astrea III was announced in June 2016. They are positive news for the secondaries market as they provide an alternative portfolio management tool to a straight secondaries sale and increased liquidity in the market, sources told Secondaries Investor.

Credit Suisse, DBS Bank and PJT Partners/Park Hill worked on the bond issuance and structuring of Astrea III. It is unclear whether they are working on Astrea IV.

Temasek, PJT Partners and Credit Suisse declined to comment. DBS did not return a request for comment.

– Marine Cole and Carmela Mendoza contributed to this report.