Singapore-based Vertex Venture Holding on July 21 priced its inaugural corporate bond amounting to S$450 million (US$330.88 million), representing the first Singapore dollar public corporate bond issued by a global venture capital investment holding company.
The unrated seven-year offering was priced at par with a coupon of 3.30%, or equivalent to a spread of 224bp over the swap offer rate. The deal attracted an order book of S$1.1 billion from 70 accounts, with 96% of the bonds sold in Singapore and 4% in in Hong Kong and other jurisdictions. By type of investors, funds, banks and public sector accounted for 65% of the paper, while the remaining 35% was bought by private banks and other investors.
The issuance enables Vertex to diversify its sources of long-term capital, allowing it to continue funding companies that offer technology solutions and/or innovative business models. Vertex also offers fixed income investors exposure to the venture capital industry not previously seen in the Singapore dollar bond market.
Proceeds from the bond issuance will be used to fund investments, including any existing or new fund commitments or new investments (directly or indirectly held), refinancing of existing borrowings, redemption of any redeemable preference shares in the share capital of the issuer, general working capital and general corporate purposes.
The bond was drawn under Vertex’s US$2 billion multi-currency debt issuance programme. DBS was appointed the sole arranger for the programme and sole lead manager and bookrunner for the bond offering.
Commenting on the deal, Vertex chairman Teo Ming Kian says the decision to issue the bond is not just to diversify and extend the company’s sources of funding as part of its transformational journey, but also to sensitize investors who have not been exposed to venture capital to this asset class.
Teo notes that from a single limited partner (LP) venture fund with US$200 million of assets under management (AUM) in 2008 when it restarted, and the transformation undertaken over the last decade, Vertex has become a global innovation platform, with many seasoned LPs in a network of underlying funds with AUM in excess of US$4.5 billion today. “Bringing in new stakeholders beyond founders and established venture capital investors will help strengthen our innovation and enterprise ecosystem,” he adds.
Vertex’s portfolio is diversified by stage, domain and geography. Vertex’s platform consists of five early-stage focus partnerships and one growth stage focus partnership.
The family of Vertex funds has invested in leading tech enterprises, including CyberArk, SolarEdge, Grab, Chipscreen, Patsnap, Innoviz, IGG, PerimeterX and Solid Energy.