iSTOX, a tokenization platform regulated by the Monetary Authority of Singapore (MAS), says it has tokenized Astrea VI private equity bonds which were issued earlier this month by Astrea VI Pte. Ltd. iSTOX claims this is the first time digital tokens with exposure to bonds in the Astrea series have been offered.
The manager of the Astrea VI transaction is a wholly-owned subsidiary of the Azalea Group, which is an indirect wholly-owned subsidiary of Temasek Holdings.
iSTOX says that these tokenized securities lower the threshold for accredited investors to gain exposure the asset by dropping the minimum investment from up to USD $200,000 to USD $20,000. These digital securities, issued in two USD-denominated tranches – Class A-2 and Class B bonds, saw interest rates fixed at 3.25% and 4.35% per annum respectively.
Under MAS regulations, the Class A-2 and Class B security tokens were open to subscriptions from accredited individual investors and institutions.
Tokenization enables the automation of certain manual processes in the issuance, distribution and post-sale management of the bond, thus making issuance and management more cost effective.
The digital securities have listed on the iSTOX exchange.
Oi Yee Choo, Chief Commercial Officer of iSTOX, commented on the digital asset:
“Like Azalea, iSTOX aims to democratise the private markets and ensure the benefits of private equity and other private asset classes are spread more equally among smaller investors. Studies have shown that global private equity averaged returns roughly double to that of global public equity over the past 10 years. Since 2018, Azalea has offered Astrea Class A-1 Private Equity Bonds to retail investors. At iSTOX, we believe the next logical step in democratisation is to help individual investors gain access to the other two USD-denominated tranches as well – Class A-2 and Class B bonds. With this latest digital token issuance, iSTOX further levels the playing field by lowering minimum investments significantly, putting these tokens within the reach of many accredited investors – hundreds of thousands in Singapore and tens of millions worldwide.”
She added that digital tokens are transforming the financial markets in a profound way.
“The technology is fundamentally more efficient. Over time, as issuers and investors become better acquainted with digital tokens, we expect market forces to shift much if not all of the global bond market to digital issuances.”
The Astrea VI bonds are backed by cash flows from a diversified portfolio of 35 private equity funds. The portfolio consists of buyout funds (81%) and growth equity funds (19%), with exposure to 802 underlying companies at launch. The US$228 million Class A-2 bonds are rated Asf by Fitch, and have a scheduled call date in March 2026.
The US$130 million Class B bonds are rated BBBsf by Fitch, and are amortizing after the full redemption of the Class A bonds. Class A-2 bonds could be fully or partially redeemed in March 2026, while Class B bonds could be fully or partially redeemed after the redemption of Class A-2 bonds. Interest is paid to bondholders every 6 months.
Founded in 2017, iSTOX is backed by Singapore Exchange, Temasek-subsidiary Heliconia Capital and Japan government-backed investors Japan Investment Corporation – Venture Growth Investments (JIC-VGI) and the Development Bank of Japan (DBJ). Accredited investors using the iSTOX platform today come from 24 countries, spanning Asia, Europe, the Americas (excluding the US), Australia, and New Zealand.