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HSBC Asset Management launches direct lending investment capability in partnership with HSBC UK

HSBC Asset Management has launched a UK-focused direct lending investment capability as part of the firm’s ambition to grow its alternative investments platform.

The new capability has been developed in partnership with HSBC UK Bank (HSBC UK), a leading originator of senior secured loans to middle market private equity-backed companies in the UK. The asset selection will be managed by HSBC Asset Management, whilst HSBC UK will supply the origination pipeline.

Working exclusively with HSBC UK, the partnership will focus on extending new senior secured loans – to borrowers with EBITDA of between GBP5m and GBP50m. It will target profitable, cash generative private equity backed mid-market companies with conservative leverage. Institutional investors will have unparalleled access to deal flow and accelerated deployment in a competitive segment of the market that has been underserved by debt funds1.

The partnership will allow HSBC to provide additional capital to mid-market companies and their private equity owners with larger senior secured loans, supporting businesses across the UK.

The capability will be led by Tom Green, Head of Investment for UK Mid-Market Credit, HSBC Asset Management. Tom will be supported by five mid-market credit investment professionals as well as the firms’ broader credit research capabilities and infrastructure.

Dominic Swan, Global CIO Private Debt & Real Assets, HSBC Asset Management said:

“Private debt is a key area of focus for HSBC Asset Management. This partnership allows us to access all eligible loan opportunities originated by HSBC UK, and participate in those that best meet our clients’ needs. This innovative approach combines the skill and experience of HSBC Asset Management’s UK Mid-Market investment team, and the unparalleled market position of HSBC UK.”

Maria Ryan, Head of Institutional Sales for the UK, Scandinavia and the Middle East, HSBC Asset Management added: “Private debt is one of the fastest growing asset classes2, particularly with UK Pension Funds and insurers seeking enhanced yield, stable cashflows and diversification. This capability provides access to private debt assets with an attractive yield premium that are traditionally hard to source.”

[1] Deloitte, Alternative Lender Tracker, Autumn 2019

[2] Prequin report, ‘The Future of Alternatives 2025’, November 2020

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