Connecting You to Private Equity

Transcription

1 Connecting You to Private Equity

2 Programme 1. Who is Azalea? 2. What is private equity? 3. What are Astrea Private Equity Bonds? 4. Updates on Astrea IV 5. Updates on Astrea III 6. Question and Answer 7. AngBao Draw

3 Who is Azalea?

4 About Us Wholly-owned subsidiary of Temasek Independent board and management team Investor, developer and manager Led by a team of professionals with extensive industry and experience in the private equity field Successfully launched Astrea III in 2016 and Astrea IV in 2018

5 Educate Investors Investor education programmes and updates Broaden Investor Access Creating investment opportunities Develop and Innovate Sustainable investment products to suit the needs of investors Our Goals

6

7 WHAT IS PRIVATE EQUITY? Investments in private companies Common in everyday products and services

8 WHAT IS A PRIVATE EQUITY FUND? Managed by a professional manager (General Partner) Multiple investors providing capital funding (Limited Partners) Invest in a portfolio of private companies diversification WHAT ROLE DOES IT PLAY IN THE MARKET? Grow the business by enhancing productivity and efficiency of investee companies With an increased value, companies are sold after 3 to 7 years

9 PUBLIC VS PRIVATE EQUITY PERFORMANCE (All amounts are % p.a. unless otherwise stated) Index 10-Year 15-Year 20-Year Buyout & Growth Equity Index Straits Times Index (US$) S&P 500 Index (US$) Source: Cambridge Associates Data as of June 2018 Notes: 1. Private indexes are pooled horizon internal rate of return (IRR) calculations, net of fees, expenses, and carried interest. The timing and magnitude of fund cash flows are integral to the IRR performance calculation. 2. Public indexes are average annual compounded return (AACR) calculations which are time weighted measures over the specified time horizon, and are shown for reference and directional purposes only. Due to the fundamental differences between the two calculations, direct comparison of IRRs to AACRs is not recommended.

10 WHO INVESTS IN PRIVATE EQUITY? Institutional Investors Pension Funds / Sovereign Wealth Funds High Net Worth Individuals WHAT ARE THE BARRIERS TO ENTRY? 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

11 WHAT IS A J-CURVE? % of Capital Commitment 40.0% Mature phase 20.0% 0.0% -20.0% -40.0% -60.0% Cash outflows Cash inflows Cumulative net cash position Year Net cash outflows at the start as manager calls capital to make investments Net cash inflows later on as managers generate returns from investments

12 RISK OF LOSS OF A MATURE PORTFOLIO Secondary Fund of Funds ( FoF ) portfolio are seasoned and diversified and tend to demonstrate shortened J-Curve and more cash flow generative Based on historical performance, investing in a portfolio of secondary PE Funds has competitive risk-adjusted returns with lower risk of capital loss Astrea IV portfolio is a mature portfolio similar to a typical secondary FoF 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% (10.0%) (20.0%) (30.0%) 51.1% 46.5% 47.4% 35.9% 1.6% 17.7% TVPI < 1.0x 1.0x TVPI < 1.5x TVPI 1.5x Single PE Fund Secondary FoF

13

14 WHAT ARE ASTREA PE BONDS? 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

15 HOW DO ASTREA PE BONDS MITIGATE HIGH BARRIERS TO ENTRY? Bite-sized investment lots available Capital tied up for shorter duration (5 years) Diversified portfolio of seasoned funds mitigates J-curve effect High minimum investment amount Long holding period J-curve effect

16

17 HOW ARE ASTREA PE BONDS STRUCTURED? Management Agreement Issue Bonds Sponsor and Manager Issuer Bondholders Class A-1 S$242m 4.35% + 0.5% Bonus (1) Class A-2 US$210m Class B US$110m 5.50% 6.75% US$1.1bn Portfolio Net Asset Value Diversified portfolio 596 Investee Companies PE Fund 1 PE Fund 2 PE Fund 3 PE Fund 4 PE Fund 5 PE Fund 36 Note: 1. If Performance Threshold is met and paid at maturity

18 STRUCTURAL SAFEGUARDS 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 Liquidity Facility Allows Issuer to draw down from bank to pay senior payments and expenses, and interest payments of Bonds in the event of shortfall Capital Call Facility Allows Issuer to draw down from bank to pay capital calls in the event of shortfall

19

20 06 JUN 2018 LAUNCH DATE 18 JUN 2018 LISTING DATE Stock Code: RMRB Astrea IV4.35%B Jun 18 Jul 18 Aug 18 Sep 18 Oct 18 Nov 18 Dec JUN 2018 CLOSING DATE 14 DEC st INTEREST PAYMENT & DISTRIBUTION REPORT

21 BOND SUMMARY (All amounts are in US$m unless otherwise stated) Bonds Bonds Outstanding Total Reserves Interest Rate (p.a.) Scheduled Call Date Ratings (1) (Fitch / S&P) Class A-1 S$ % 14 June 2023 Asf / A (sf) $40 Class A-2 $ % 14 June 2023 Asf / Not rated Class B $110 N/A 6.75% N/A BBBsf / Not rated Note: 1. Ratings as of 14 December 2018.

22 KEY HIGHLIGHTS (All amounts are in US$ unless otherwise stated) Semi-annual interest paid to bondholders on 14 Dec 2018 Class A % p.a. Class A % p.a. Class B 6.75% p.a. Portfolio value $1,047m $40m reserved for Class A as scheduled Maximum Loan-to-Value Ratio of 50% not exceeded

23 PORTFOLIO PROFILE PORTFOLIO NAV BY FUND REGION (All amounts are in US$m unless otherwise stated) 63.9% 17.8% 62.8% 19.1% 18.3% 18.1% Amounts reflect values as of 31 Mar 2018 Amounts reflect values as of 30 Nov 2018

24 PORTFOLIO PROFILE PORTFOLIO NAV BY FUND STRATEGY (All amounts are in US$m unless otherwise stated) 86.5% Buyout Funds Fund Strategy (% of NAV) 31 Mar Nov 2018 Buyout Growth Equity Private Debt 86.1% 12.3% 1.6% 86.5% 11.3% 2.2% The majority of the portfolio comprised buyout funds As of 30 Nov 2018 As of 30 Nov 2018 Top 3 PE Fund Managers (GPs) %of NAV Blackstone Capital Partners 10.9% Silver Lake Partners 10.4% PAG Asia 8.3% Top 3 Fund Investments %of NAV Blackstone Capital Partners VI, L.P. 9.6% Silver Lake Partners IV, L.P. 8.4% PAG Asia I LP 8.3%

25 PORTFOLIO PROFILE PORTFOLIO NAV BY VINTAGE YEAR 300 US$m years Weighted Average Fund Age The majority of the portfolio comprised funds of vintages. The large exposure to mature funds in cashgenerative stages ensured that the portfolio was able to provide strong distribution cash flows. 22.0% 19.7% 19.8% 19.9% 23.6% 21.2% % 12.2% % 9.4% 7.6% 7.3% 8.1% 4.9% % 0.0% % 1.2% Vintage Year Fund Age Portfolio NAV by Vintage Year as of 31 Mar 2018 Portfolio NAV by Vintage Year as of 30 Nov 2018 Note: Percentage points above the bar represent percentages of Portfolio NAV at respective dates

26 PORTFOLIO ACTIVITY (All amounts are in US$m unless otherwise stated) Private Equity Portfolio Appreciation Private Equity Portfolio Cash Flow Activity 1, ,098 1,098 Net Distributions = Mar 2018 Portfolio NAV Portfolio NAV + FV Gains Portfolio NAV + FV Gains Distributions Capital Calls 30 Nov 2018 Ending Portfolio NAV Portfolio NAV Fair Value ( FV ) Gains Note: All Portfolio NAV numbers presented are unaudited except for 31 Mar 2018 Portfolio NAV.

27 PRIORITY OF PAYMENTS FOR FIRST DISTRIBUTION DATE 1 (All amounts are in US$ unless otherwise stated) Available Cash Flow for Priority of Payments $148m $3m Payments for: Taxes and expenses (Clause 1) Manager (Clause 3) Liquidity Facility (Clause 4) $13m Interest for: Class A-1 Bonds and Class A-2 Bonds (Clause 5) Class B Bonds (Clause 6) $40m Payments for Reserves Accounts: Reserve Amount (Clause 8) LTV Test Performed $1m Payments for: Capital Calls and Capital Call Facility (Clause 11) $91m Payments to: Sponsor (Clause 14) Notes: 1. The First Distribution Period is from 1 April to 14 December 2018 and includes the period prior to issuance of the Bonds from 1 April to 13 June Beginning Cash Balance was US$8m. Net receivables of US$6m includes prior period distributions from PE Funds received in current period after deducting certain operating expenses. 3. 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$5m.

28 LOAN TO VALUE ( LTV ) LTV COMPUTATION (All amounts are in US$m unless otherwise stated) Calculated as of Distribution Reference Date 30 November 2018 A Total Portfolio NAV $1,047 The Maximum LTV Ratio of 50% was not exceeded. Hence, no payment to the Reserves Accounts pursuant to Clause 14 of the Priority of Payments was required. Total Principal Amount of Bonds 1 $ 504 B Liquidity Facility Loans Outstanding $ 0 Total Net Debt 464 C Capital Call Facility Loans Outstanding Payments to Reserves Accounts $ 0 $ 40 Total Portfolio NAV LTV = 44.3% 1,047 B C Total Net Debt $ 464 US$m (B C) / A LTV Ratio 44.3% 50% Maximum LTV Ratio Note: 1. Class A-1 principal calculated based on blended USD:SGD forward FX rate of

29

30 NOTES SUMMARY (All amounts are in US$m unless otherwise stated) Bonds Notes Outstanding Total Reserves Interest Rate (p.a.) Scheduled Maturity Ratings 1 (Fitch / S&P) Class A-1 S$ % 8 July 2019 A+sf / A+ (sf) $ 258 Class A-2 $ % 8 July 2021 Asf / Not Rated Class B $100 N/A 6.50% N/A BBBsf / Not Rated Class C $88 2 N/A 9.25%PIK 3 N/A Not Rated Note: 1.Ratings are as of 8 July Fitch and S&P upgraded Class A-1 Notes from Asf to A+sf in July 2017 and A (sf) to A+ (sf) in September 2017 respectively. 2.Class C Principal includes 5 periods of PIK interest. 3.Paid-in-kind interest per annum, compounded semi-annually.

31 KEY HIGHLIGHTS (All amounts are in US$ unless otherwise stated) Total Distributions Received US$96m Portfolio value US$852m Total Capital Calls US$13m Maximum Loan-to-Value Ratio of 35% not exceeded

32 PORTFOLIO ACTIVITY (All amounts are in US$m unless otherwise stated) Private Equity Portfolio Appreciation Private Equity Portfolio Cash Flow Activity Jun 2018 Portfolio NAV Portfolio NAV + FV Gains Portfolio NAV + FV Gains Distributions Capital Calls 21 Dec 2018 Ending Portfolio NAV Portfolio NAV Fair Value ( FV ) Gains

33 LOAN TO VALUE ( LTV ) LTV COMPUTATION (All amounts are in US$m unless otherwise stated) Calculated as of Distribution Reference Date 30 November 2018 A Total Portfolio NAV $852 B Total Principal Amount of Notes and Liquidity Facility Loans Outstanding (1) $522 The Maximum LTV Ratio of 35% was not exceeded. Hence, no payment to the Reserves Accounts pursuant to Clause 14 of the Priority of Payments was required. C Total Reserves Balance $241 D Payments to Reserves Accounts pursuant to Clause 9, 10, 11 of the Priority of Payments (2) $ 17 LTV = 31.0% B C D Total Net Debt $264 (B C D ) / A LTV Ratio 31.0% 35% Maximum LTV Ratio US$m Notes: 1. Class A-1 Principal is hedged at USD:SGD forward FX rate of Please refer to Priority of Payments section in the Information Memorandum dated 21 June 2016 for full details.

34

35 PAYMENT TO CLASS A-1 BONDHOLDERS Example If an investor buys a Class A-1 Bond a principal value of S$1,000 on the market at $1,050, and holds the Bond to maturity: Investor purchases Bond Issue Date 14 Jun 2018 First Distribution Date Second Distribution Date Third Distribution Date... Scheduled Call Date 14 Dec Jun Dec Jun days 182 days 183 days First period Second period Third period Redemption S$1,000 per Class A-1 Bond will be repaid to the bondholder S$21.81 S$21.69 S$21.81 Interest to be received 183 days S$1,000 x 4.35% x 365 days = S$21.81 Interest to be received 182 days S$1,000 x 4.35% x 365 days = S$21.69 Interest to be received 183 days S$1,000 x 4.35% x 365 days = S$21.81

36 PAYMENT TO BONDHOLDERS Example On 30 th May 2019, a Coupon Payment Announcement is made for coupon payment on 14 th June 2019 June 2019 Su Mo Tu We Th Fr Sa Coupon Payment Announcement Ex-Date Record Date Payment Date Coupon Payment Announcement The date of announcement to pay interest on Astrea IV PE Bonds. Record Date The date which investors must be listed as official Bondholders in order to receive the upcoming interest payment. This is the fifth business day before the payment date. Ex-Date The date by which investors must own the Bond in order to become an owner of record and receive interest. For SGX-listed securities, this date is one business day before the Record Date. Payment Date The date that interest is actually paid out to Bondholders. If you purchase the Bond on or after the Ex-Date, you will not receive the coupon payment

37

38 Azalea as an investor, developer, and innovator Azalea will continue to develop the Astrea programme, with an aim to reach a broader investor group in the future

39

40 Thank You

41

42 ASTREA IV PORTFOLIO FUND INVESTMENT SCHEDULE (All amounts are in US$m unless otherwise stated) # Funds Vintage Year Region Strategy NAV % of NAV Undrawn Capital Commitments Total Exposure % of Total Exposure 1 A8 - B (Feeder) L.P Europe Buyout $ % $ 3.6 $ % 2 Apollo Overseas Partners (Delaware 892) VI, L.P U.S. Buyout $ % $ 4.2 $ % 3 Apollo Overseas Partners VIII, L.P U.S. Buyout $ % $ 5.7 $ % 4 Bain Capital Fund XI, L.P U.S. Buyout $ % $ 7.5 $ % 5 Blackstone Capital Partners V, L.P. and BCP V-S L.P U.S. Buyout $ % $ 6.7 $ % 6 Blackstone Capital Partners VI, L.P U.S. Buyout $ % $ 14.6 $ % 7 Carlyle Partners VI, L.P U.S. Buyout $ % $ 2.4 $ % 8 Clayton, Dubilier & Rice Fund IX, L.P U.S. Buyout $ % $ 5.7 $ % 9 Crestview Partners (TE), L.P U.S. Buyout $ % $ 0.4 $ % 10 Crestview Partners II, L.P U.S. Buyout $ % $ 7.6 $ % 11 CVC Capital Partners VI (B) L.P Europe Buyout $ % $ 0.4 $ % 12 DBAG Fund VI (Guernsey) L.P Europe Buyout $ % $ 2.4 $ % 13 EQT Mid Market (No.1) Feeder Limited Partnership 2013 Europe Buyout $ % $ 3.0 $ % 14 Hahn & Company I L.P Asia Buyout $ % $ 1.1 $ % 15 IK VII No.2 Limited Partnership 2012 Europe Buyout $ % $ 3.2 $ % 16 Industri Kapital 2007 Limited Partnership IV 2007 Europe Buyout $ % $ 2.9 $ % 17 KKR Asian Fund II TE Blocker L.P Asia Buyout $ % $ 2.6 $ % 18 KKR 2006 Fund L.P U.S. Buyout $ % $ 0.4 $ % 19 KKR North America Fund XI L.P U.S. Buyout $ % $ 3.1 $ % 20 Littlejohn Fund V, L.P U.S. Buyout $ % $ 3.6 $ % 21 MatlinPatterson Global Opportunities Partners III L.P U.S. Buyout $ % $ 2.3 $ % 22 Onex Partners IV LP 2014 U.S. Buyout $ % $ 1.3 $ % 23 PAG Asia I LP 2011 Asia Buyout $ % $ 6.9 $ % 24 Permira V L.P Europe Buyout $ % $ 5.0 $ % 25 Silver Lake Partners III, L.P U.S. Buyout $ % $ 3.7 $ % 26 Silver Lake Partners IV, L.P U.S. Buyout $ % $ 8.1 $ % 27 Tailwind Capital Partners (Cayman), L.P U.S. Buyout $ % $ 3.5 $ % 28 TPG Partners IV, L.P U.S. Buyout $ % $ 0.1 $ % 29 TPG Partners V, L.P U.S. Buyout $ % $ 3.4 $ % 30 TPG Partners VI, L.P U.S. Buyout $ % $ 1.5 $ %

43 ASTREA IV PORTFOLIO FUND INVESTMENT SCHEDULE (All amounts are in US$m unless otherwise stated) # Funds Vintage Year Region Strategy NAV % of NAV Undrawn Capital Commitments Total Exposure % of Total Exposure 31 Vista Equity Partners Fund V-A, L.P U.S. Buyout $ % $ 4.6 $ % 32 FountainVest China Growth Fund, L.P Asia Growth Equity $ % $ 4.1 $ % 33 Raine Partners I LP 2010 U.S. Growth Equity $ % $ 0.0 $ % 34 Trustbridge Partners II, L.P Asia Growth Equity $ % $ 1.2 $ % 35 Warburg Pincus Private Equity XI-B, L.P U.S. Growth Equity $ % $ 0.0 $ % 36 Offshore Mezzanine Partners II, L.P U.S. Private Debt $ % $ 7.3 $ % Ending Portfolio $1, % $134.1 $1, % Note: 1.Average weighted by Total Exposure.

44 ASTREA III PORTFOLIO FUND INVESTMENTS SCHEDULE (All amounts are in US$m unless otherwise stated) # Funds Vintage Year Region Strategy NAV % of NAV Undrawn Capital Commitments Total Exposure % of Total Exposure 1 AEA Investors 2006 Fund L.P U.S. Buyout $ % $ 2.4 $ % 2 AEA Investors Fund V LP 2011 U.S. Buyout $ % $ 6.0 $ % 3 Blackstone Capital Partners V L.P. and BCP V-S L.P U.S. Buyout $ % $ 7.5 $ % 4 CITIC Capital China Partners II, L.P Asia Buyout $ % $ 3.3 $ % 5 DBAG Fund V International GmbH & Co. KG 2006 Europe Buyout $ % $ 5.8 $ % 6 EQT Mid Market (No. 1) Feeder Limited Partnership 2012 Europe Buyout $ % $ 3.9 $ % 7 EQT VI (No. 1) Limited Partnership 2011 Europe Buyout $ % $ 3.5 $ % 8 Hahn & Company I L.P Asia Buyout $ % $ 1.2 $ % 9 Hony Capital Fund V, L.P Asia Buyout $ % $ 2.3 $ % 10 Kelso Investment Associates VIII, L.P U.S. Buyout $ % $ 3.8 $ % 11 KKR 2006 Fund L.P U.S. Buyout $ % $ 1.7 $ % 12 KKR North America Fund XI L.P U.S. Buyout $ % $ 5.2 $ % 13 Lindsay Goldberg III L.P U.S. Buyout $ % $ 1.1 $ % 14 Metalmark Capital Partners Cayman II, L.P U.S. Buyout $ % $ 11.4 $ % 15 PAG Asia I LP 2011 Asia Buyout $ % $ 4.4 $ % 16 Permira IV L.P Europe Buyout $ % $ 0.5 $ % 17 Raine Partners I LP 2010 U.S. Growth Equity $ % $ 0.0 $ % 18 RRJ Capital Master Fund II, L.P Asia Growth Equity $ % $ 6.8 $ % 19 Silver Lake Partners III, L.P.* 2007 U.S. Buyout $ % $ 11.2 $ % 20 SL SPV-Feeder I, L.P.* 2017 U.S. Buyout $ % $ 0.0 $ % 21 Summit Partners Growth Equity Fund VIII-A, L.P U.S. Growth Equity $ % $ 7.3 $ % 22 TA Atlantic and Pacific VI L.P U.S. Growth Equity $ % $ 0.6 $ % 19 Silver Lake Partners III, L.P.* 2007 U.S. Buyout $ % $ 11.2 $ % 20 SL SPV-Feeder I, L.P.* 2017 U.S. Buyout $ % $ 0.0 $ % *In Q3 2017, Silver Lake Partners III offered its Limited Partners ( LPs ) the option to either retain their respective interests in one of its portfolio companies by rolling over its interest to a new special purpose vehicle (namely, SL SPV-Feeder I, L.P.), or sell their respective share of Silver Lake Partners III s investment in that portfolio company to a successor fund or its affiliates. On the recommendation by the Manager and approval by the Sponsor, AsterThree Assets II Pte. Ltd. opted to retain its pro-rata interest in the portfolio company via SL SPV-Feeder I (the SPV ), which will continue to be managed by Silver Lake. The Manager is of the opinion that the portfolio company has further upside potential.

45 ASTREA III PORTFOLIO FUND INVESTMENTS SCHEDULE (All amounts are in US$m unless otherwise stated) # Funds Vintage Year Region Strategy NAV % of NAV Undrawn Capital Commitments Total Exposure % of Total Exposure 21 Summit Partners Growth Equity Fund VIII-A, L.P U.S. Growth Equity $ % $ 7.3 $ % 22 TA Atlantic and Pacific VI L.P U.S. Growth Equity $ % $ 0.6 $ % 23 TA XI, L.P U.S. Growth Equity $ % $ 0.4 $ % 24 TPG Partners V, L.P U.S. Buyout $ % $ 1.0 $ % 25 TPG Partners VI, L.P U.S. Buyout $ % $ 3.7 $ % 26 Warburg Pincus Private Equity XI, L.P U.S. Growth Equity $ % $ 0.0 $ % Remaining 9 funds U.S. Buyout $ % $ 12.7 $ % Ending Portfolio $ % $ $ % Note: 1.Average weighted by Total Exposure.