Who is Azalea? About Us Wholly-owned Independent board Investor, - - PowerPoint PPT Presentation

Who is Azalea?

About Us

Wholly-owned subsidiary of Temasek Investor, developer and manager Successfully launched

• 2016 - Astrea III
• 2018 - Astrea IV
• 2019 - Astrea V
• 2019 - Altrium I

Led by a team of professionals with extensive industry and experience in the private equity field Independent board and management team

Develop and Innovate

Sustainable investment products to suit the needs of investors

Our Goals

Broaden Investor Access

Creating investment opportunities

Educate Investors

Investor education programmes and updates

Astrea PE Bonds $1,142m $1,098m $1,324m

Private Equity (PE) Fund Investments (US$)

Astrea PE Bonds $1,142m $1,098m $1,324m

Private Equity (PE) Fund Investments (US$)

July 2016 June 2018 June 2019 Astrea III Bonds $510m Astrea IV Bonds $501m Astrea V Bonds $600m Equity Equity Equity

What is Private Equity?

Different PE strategies Buyout funds invest in established businesses

General examples of private equity owned companies

Growth Equity funds invest in high growth

Managed by a professional manager (General Partner) Invest in a portfolio of private companies – diversification Multiple investors providing capital funding (Limited Partners) Grow the business by enhancing productivity and efficiency of investee companies With an increased value, companies are sold after 3 to 7 years

What Role Does It Play In The Market? What is a Private Equity Fund?

What are the Barriers to Entry?

Institutional Investors Pension Funds / Sovereign Wealth Funds High Net Worth Individuals

High amount of minimum investment capital required Long holding period requires invested capital to be locked up for a long time (~10 years) J-curve effect exposes investors to initial negative cash flows

Who Invests in Private Equity?

Net cash outflows at the start as manager calls capital to make investments Net cash inflows later on as managers generate returns from investments

• 60.0%
• 40.0%
• 20.0%

0.0% 20.0% 40.0% 1 2 3 4 5 6 7 8 9 10 11 12 13 Cash outflows Cash inflows Cumulative net cash position Year % of Capital Commitment

Mature phase

What is a J-Curve?

Risk of Loss

• Historically, portfolios of mature funds have demonstrated lower risk of loss –

– only ~1.4% of such funds experienced a loss

• Of the loss-making funds, the worst performing fund experienced a ~15% loss
• With a conservative LTV, the risk of loss to bondholders is low

Source: Preqin, May 2019. Data as of the latest available performance per fund, obtained from https://www.preqin.com/user/PE/product_menu_pa_advanced.aspx, last accessed on 8 May 2019. Each strategy is comprised of the following Preqin fund classifications; PE Fund (Preqin Classification: Buyout, Distressed Debt, Growth, Mezzanine, Venture (All), Real Estate). Primary FoF (Preqin Classification: Fund of Funds). Secondary FoF (Preqin Classification: Secondaries) obtained from Preqin Performance Analyst.

Bonds issued at conservative ~45% Loan-to-Value Ratio Capital Structure Portfolio needs to lose 55% of value before Bondholders are impacted

Astrea PE Bonds are issued at conservative LTVs Astrea Portfolio

Portfolio

Bonds

Equity

Portfolios of mature funds

Portfolios of mature funds Worst performing portfolio lost ~15% of its value

Prospectus Gatefold

Prospectus Gatefold

Prospectus Gatefold

Prospectus Gatefold

Prospectus Gatefold

Prospectus Gatefold

Prospectus Gatefold

Prospectus Gatefold

Product Highlights Sheet (PHS)

Product Highlights Sheet (PHS)

Prospectus

Prospectus

Innovative bond

to provide exposure to private equity

Backed by cash flows

from private equity fund investments

Listed on SGX

to address illiquidity

Shorter holding period

compared to traditional private equity

What are Astrea PE Bonds?

Astrea PE Bonds Mitigate Barriers to Investing in PE Funds

High Investment Capital J-Curve Effect More bite-sized investment lots available Capital tied up for shorter durations

Diversified portfolio of seasoned funds mitigates initial cash outflow

PE Bonds

Long Holding Period

Barriers to Investing in PE Funds

Transaction Structure

Diversified portfolio Issuer

PE Fund 1 PE Fund 2 PE Fund 3 PE Fund 4 PE Fund 5 PE Fund 38

………………………………………

Flow through Priority of Payments

38

PE Funds

862

Investee Companies

5.4 years

Weighted Average Fund Age

………………………………………

Transaction Structure

Payments for: Clause 1: Taxes and expenses Clause 3: Manager Clause 4: Credit Facility Interest for: Clause 5: Class A-1 Bonds and Class A-2 Bonds Clause 6: Class B Bonds Payments for Reserves Accounts: Clause 8: Reserve Amount Payments to: Clause 13: Sponsor

Pay Bon

• nd-

hol

• lders

rs

Priority of Payments

Reserves Accounts

Regular cash build-up to repay principal of Class A Bonds

Sponsor Sharing

To enable a faster build-up of reserves

Maximum Loan-to-Value Ratio

Debt limit at 50%, crossing this limit triggers lowering of Total Net Debt

Credit Facility

Allows Issuer to draw down from bank to pay key expenses, interest payments of Bonds and capital calls in the event of shortfall

Structural Safeguards

1st INTEREST PAYMENT & DISTRIBUTION REPORT 20 DEC 2019 LAUNCH DATE 12 JUN 2019 CLOSING DATE 18 JUN 2019 LISTING DATE 21 JUN 2019

Stock Code: 5A1B | Astrea V3.85%B290620 www.astrea.com.sg/a5

Jun ‘19 Jul ‘19 Aug ‘19 Sep ‘19 Oct ‘19 Nov ‘19 Dec ‘19

1.01 1.02 1.03 1.04 1.05 1.06 1.07

Jan ‘20

Bond Summary

Bonds Bonds Outstanding Total Reserves Interest Rate (p.a.) Scheduled Call Date Ratings(1) (Fitch / S&P)

Class A-1 S$315 $47 3.85% 20 June 2024 Asf / A+ (sf) Class A-2 $230 4.50% 20 June 2024 Asf / Not rated Class B $140 N/A 5.75% N/A BBBsf / Not rated

(All amounts are in US$m unless otherwise stated)

Note: (1) Ratings as of 20 December 2019.

Key Highlights

Semi-annual interest paid to bondholders

• n 20 Dec 2019

Class A-1 – 3.85% p.a. Class A-2 – 4.50% p.a. Class B – 5.75% p.a.

Portfolio value $1,366m $46.7m reserved for Class A as scheduled Maximum Loan-to-Value Ratio

• f 50% not

exceeded

Portfolio NAV by Fund Region

58.7% 19.3% 22.0%

56.1% 21.6% 22.3%

Amounts reflect values as of 31 Mar 2019 Amounts reflect values as of 6 Dec 2019

(All amounts are in US$m unless otherwise stated)

Portfolio NAV by Fund Strategy

(All amounts are in US$m unless otherwise stated)

Buyout Growth Equity

79.7%

Buyout Funds

The majority of the portfolio comprised buyout funds 81.0% 19.0% 79.7% 20.3%

31 Mar 2019 Fund Strategy (% of NAV)

As of 6 Dec 2019 As of 6 Dec 2019

6 Dec 2019

Top3PEFundManagers(GPs) %of NAV KKR 8.7% Warburg Pincus 6.5% TPG 6.1% Top3FundInvestments %of NAV Silver LakePartners IV, L.P . 5.6% KKR North America Fund XI L.P. 4.4% General Atlantic, L.P. 4.3%

Portfolio NAV by Vintage Year

50 100 150 200 250 300 350 400 2011 8 2012 7 2013 6 2014 5 2015 4 2016 3 Portfolio NAV by Vintage Year as of 31 Mar 2019 Portfolio NAV by Vintage Year as of 6 Dec 2019

US$m 7.4% 17.9% 22.3% 25.2% 17.0% 10.2% 7.2% 15.6% 20.8% 26.3% 18.0% 12.1% Vintage Year Fund Age (years)

Portfolio Activity

(All amounts are in US$m unless otherwise stated)

1,324 1,366

Distributions Capital Calls

1,484

Private Equity Portfolio Appreciation

Portfolio NAV Cumulative Net Distributions

Private Equity Portfolio Cash Flow Activity

31 Mar 2019 Portfolio NAV 6 Dec 2019 Portfolio NAV + Cumulative Net Distributions 6 Dec 2019 Ending Portfolio NAV

Net Distributions = 118

31 Mar 2019 Starting Portfolio NAV

118

Fair Value Gains

Priority of Payments for First Distribution Date

(All amounts are in US$m unless otherwise stated)

i Net Distributions + $118m

1

ii Beginning Cash Balance and net receivables + $ 69m iii Residual balance from Settlement Accounts 2 + $ 7m iv Retained Amount for the next period

• $ 10m

$184m

Priority of Payments for Third Distribution Date

(All amounts are in US$m unless otherwise stated)

Notes: 1. Other inflows includes interest income and prior period distributions from PE Funds received in current period after deducting certain operating expenses. 2. US$15m was set aside from the gross proceeds of the Bonds in the Issuer’s Settlement Accounts for payment of fees and expenses incurred in connection with the issue and offering of the Bonds. The residual balance after transaction and related fees and expenses was US$7m.

LTV Test Performed

Available Cash Flow for Priority of Payments

$184m

Payments for: Clause 1: Taxes and expenses Clause 3: Manager Clause 4: Credit Facility

$3m

Interest for: Clause 5: Class A-1 Bonds and Class A-2 Bonds Clause 6: Class B Bonds

$14m

Payments for Reserves Accounts: Clause 8: Reserve Amount

$47m

Payments to: Clause 13: Sponsor

$120m

Pay Bon

• nd-

hol

• lders

rs

0.5% bonus payment upon redemption of Class A-1 Bonds triggered when Sponsor receives US$407m

Loan to Value (“LTV”) Computation

(All amounts are in US$m unless otherwise stated) US$m

1,366 1,366 558 Total Portfolio NAV Total Net Debt

Note: 1. Class A-1 principal calculated based on blended USD:SGD forward FX rate of 1.33825.

LTV = 40.8%

50% Maximum LTV Ratio

The Maximum LTV Ratio of 50% was not exceeded. Hence, no payment to the Reserves Accounts was required.

Calculated as of Distribution Reference Date 6 December 2019

A Total Portfolio NAV $1,366 B Total Principal Amount

• f Bonds1

$ 605 Credit Facility Loans Outstanding $ 0 C Payments to Reserves Accounts $ 47 B – C Total Net Debt $ 558 (B – C) / A LTV Ratio 40.8%

Bond Summary

Bonds Bonds Outstanding Total Reserves Interest Rate (p.a.) Scheduled Call Date Ratings(2) (Fitch / S&P)

Class A-1 S$242 $118(1) 4.35% 14 June 2023 A+sf / A (sf) Class A-2 $210 5.50% 14 June 2023 Asf / Not rated Class B $110 N/A 6.75% N/A BBBsf / Not rated

(All amounts are in US$m unless otherwise stated)

Note: 1. This includes inflows from both the current and prior Distribution Periods. The Reserves Amounts includes SGD balances which were translated into USD as of 2 December 2019. Reserve Amounts from the prior period were placed into fixed deposits and investments in accordance with the Eligible Deposits/ Investments criteria. Likewise, the US$40m from the current period will be invested in accordance with the Eligible Deposits/Investments criteria. 2. Ratings as of 14 December 2019.

Key Highlights

Semi-annual interest paid to bondholders

• n 14 Dec 2019

Class A-1 – 4.35% p.a. Class A-2 – 5.50% p.a. Class B – 6.75% p.a.

Portfolio value $884m $40m reserved for Class A as scheduled Maximum Loan-to-Value Ratio

• f 50% not

exceeded

Portfolio NAV by Fund Region

61.4% 21.1% 17.5%

60.8% 20.8% 18.4%

Amounts reflect values as of 30 May 2019 Amounts reflect values as of 2 Dec 2019

(All amounts are in US$m unless otherwise stated)

Portfolio NAV by Fund Strategy

(All amounts are in US$m unless otherwise stated)

Buyout Growth Equity Private Debt

88.5%

Buyout Funds

The majority of the portfolio comprised buyout funds

88.4% 10.1% 88.5% 10.0% 30 May 2019 Fund Strategy (% of NAV) 1.5% 1.5%

As of 2 Dec 2019 As of 2 Dec 2019

2 Dec 2019

Top3PEFundManagers(GPs) %of NAV Silver Lake Partners 10.6% Blackstone Capital Partners 9.2% PAGAsia 8.2% Top3FundInvestments %of NAV Silver LakePartners IV, L.P . 9.4% Blackstone Capital Partners VI, L.P. 8.6% PAG Asia I LP 8.2%

Portfolio NAV by Vintage Year

Portfolio NAV by Vintage Year as of 2 Dec 2019 50 100 150 200 250 300 ≤2006 ≥13 2007 12 2008 11 2009 10 2010 9 2011 8 2012 7 2013 6 2014 5 US$m

Vintage Year Fund Age

5.1% 5.4% 3.6% 0.0% 22.8% 26.2% 14.8% 1.2% 20.9% Portfolio NAV by Vintage Year as of 30 May 2019 3.6% 6.2% 4.0% 0.0% 1.1% 21.1% 21.6% 25.9% 16.5%

Portfolio Activity

(All amounts are in US$m unless otherwise stated) 1,098 1,047 956 884 134 243 353

1,237

Private Equity Portfolio Appreciation

Portfolio NAV Cumulative Net Distribution

Private Equity Portfolio Cash Flow Activity

31 Mar 2018 Portfolio NAV 2 December 2019 Portfolio NAV + Cumulative Net Distributions

Net Distributions = 110

1,199 1,181

30 Nov 2018 Portfolio NAV + Cumulative Net Distributions 30 May 2019 Portfolio NAV + Cumulative Net Distributions 30 May 2019 Starting Portfolio NAV Distributions Capital Calls Fair Value Gains 2 Dec 2019 Ending Portfolio NAV

Priority of Payments for Third Distribution Date

(All amounts are in US$m unless otherwise stated)

i Net Distributions + $110m

1

ii Beginning Cash Balance and other inflows + $ 7 m iii Retained Amount for the next period

• $ 5m

$112m

Priority of Payments for Third Distribution Date

(All amounts are in US$m unless otherwise stated)

Available Cash Flow for Priority of Payments $112m

Payments for: Taxes and expenses (Clause 1) Manager (Clause 3) Liquidity Facility (Clause 4) Interest for: Class A-1 Bonds and Class A-2 Bonds (Clause 5) Class B Bonds (Clause 6) Payments for: Capital Calls and Capital Call Facility (Clause 11) Payments to: Sponsor (Clause 14) Payments for Reserves Accounts: Reserve Amount (Clause 8)

$2m $13m $1m $56m $40m

Notes: 1. Other inflows includes interest income from fixed deposits placed using balances from the Operating Accounts 2. As of Third Distribution Date, Sponsor has received US$201m.

LTV Test Performed

0.5% bonus payment upon redemption of Class A-1 Bonds triggered when Sponsor receives US$313m2.

Loan to Value (“LTV”) Computation

(All amounts are in US$m unless otherwise stated)

Calculated as of Distribution Reference Date 2 December 2019

A Total Portfolio NAV $884 B Total Principal Amount

• f Bonds1

$504 Liquidity Facility Loans Outstanding $ 0 Capital Call Facility Loans Outstanding $ 0 C Reserves Accounts Balance $ 78 D Payments to Reserves Accounts $ 40 B – C – D Total Net Debt $386 (B – C – D) / A LTV Ratio 43.7% Total Portfolio NAV Total Net Debt

US$m

386 884 The Maximum LTV Ratio of 50% was not exceeded. Hence, no payment to the Reserves Accounts was required.

LTV = 43.7%

50% Maximum LTV Ratio

Note: 1. Class A-1 principal calculated based on blended USD:SGD forward FX rate of 1.31677.

Thank You

www.astrea.com.sg contact@azalea.com.sg