HSBC asset-management unit dives into private credit in Asia, with US$4 billion backing

HSBC Asset Management will launch a dedicated private-credit strategy in Asia-Pacific later this year after its parent unveiled plans to inject US$4 billion into its funds to bolster the higher-returning business.

The asset management arm of Hong Kong’s biggest lender aimed to use the offering to support corporate, family and private equity-backed clients across the region, according to Chris Fletcher, head of Asia-Pacific private credit.

“We are going to be very much focused on supporting performing, mid-market companies,” he said during a panel discussion at the Greater China Private Equity Summit last week.

The move coincided with HSBC’s decision to invest the cash into its asset management arm’s private-credit funds, according to a Reuters report on Monday. The bank aimed to attract additional capital from external investors to build a US$50 billion credit fund within five years, which would be invested globally, with an initial focus on direct lending in Asia and the UK, the report said. The bank declined to comment.

HSBC is the latest financial institution to enter the private-credit market, drawn by attractive returns and diversification advantages. The attention on Asia also makes sense due to the region’s significant growth potential compared with the more developed Western markets in non-traditional lending.

“There is a clear trend in the private-credit market, characterised by rising investments from insurance companies, family offices and sovereign wealth funds,” said Stephen Wong, an executive committee member of the Chartered Alternative Investment Analyst Association’s Greater China chapter.