HSBC Asset Management has entered the direct lending sector with a UK-focused mandate in partnership with HSBC UK.
The deal will see the British arm provide an origination pipeline to HSBC AM, which will then handle asset selection. HSBC UK Bank is an established originator of senior secured loans to mid-market private equity-backed companies in the country.
HSBC Asset Management will provide new senior secured loans to borrowers with EBITDA of between £5 million and £50 million ($7 million-$70 million; €5.78 million-€57.8 million). It will target profitable, cash-generation business backed by private equity sponsors with conservative leverage.
The partnership means the bank will be able to provide additional capital to mid-market companies with larger senior secured loans due to the additional capital made available by HSBC AM.
Tom Green, head of investment for UK mid-market credit at HSBC AM, will lead the new capability and is supported by a team of five mid-market credit professionals as well as the firm’s broader credit research and infrastructure capabilities.
Maria Ryan, head of institutional sales for the UK, Scandinavia and the Middle East at HSBC AM, said: “Private debt is one of the fastest growing asset classes, 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.”
HSBC said it is working on both fund solutions and managed accounts to enable its institutional investor clients to access the asset class.