With private equity expected to top $9 trillion by 2025, and AuM in alternative assets growing by around 10 per a year, HSBC is drawing on two divisions to expand its private debt pipeline.
HSBC Asset Management has launched a UK-focused direct lending investment service aimed at meeting keen demand for alternative investments.
The new private debt capability, developed with HSBC UK Bank, will focus on boosting secured loans to UK-wide firms in the £5 million ($6.98 million) to £50 million mid market that are profitable and cash-generating, with conservative leverage, the global bank said.
HSBC will provide additional capital to these companies and their private equity owners in a market that Deloitte research shows has been underserved by debt funds.
“The partnership allows us to access all eligible loan opportunities originated by HSBC UK and participate in those that best meet our clients’ needs," Dominic Swan, global CIO for private debt and real assets said.
Tom Green, head of investment for UK mid-market credit at HSBC AM, will lead the venture, along with five mid-market credit specialists and the firms’ broader credit research and infrastructure teams.
“Private debt is one of the fastest growing asset classes, particularly with UK pension funds and insurers seeking enhanced yield, stable cashflows and diversification. The capability provides access to private debt assets with an attractive yield premium that are traditionally hard to source,” HSBC AM’s institutional sales lead Maria Ryan said.