The management team of HSBC Specialist Investments (HSIL), the HSBC division focused on infrastructure and real estate, has completed its slated spinout, renaming the platform InfraRed Capital Partners.
InfraRed has more than $4 billion of capital under management managed by 80 staff across offices in London, Hong Kong, New York and Paris. It has raised 11 funds since inception, six of which have been ‘materially’ or fully realised. It has also listed an investment company on the London Stock Exchange.
In an announcement of the completion of the spinout today, Werner von Guionneau, chief executive of InfraRed, said: “Since we began the spin-out process last year the business has remained extremely active, completing a number of significant transactions across all the funds that we manage.”
As part of the agreement between the management of HSIL and the bank, the latter will retain a 19.9 percent stake in the platform. HSBC’s decision to approve the management spinout was principally driven by increasing regulation which stands to make banks’ investment and management of funds in the alternative sectors harder, though there is no single regulation that legally required the bank to sell a majority interest in HSIL.
On the real estate side, HSIL last month bought a trio of retail malls in China for approximately $280 million in a joint venture with Tesco, the British supermarket group and Singapore –listed Metro Holdings Limited. HSIL completed the deal on behalf of its HSBC NF China Retail Fund, which closed in 2007 on $710 million in capital commitments and has believed to have generated weighted IRRs of roughly 20 percent from asset sales so far, PERE sources said.
HSBC also remains incentivised to support the platform as it still has approximately $1 billion of invested capital in InfraRed’s current funds. In today’s announcement HSBC said it would consider further commitments to future funds of InfraRed on a ‘case by case’ basis. Richard Cole, head of principal investments at HSBC, said: “HSBC looks forward as a minority shareholder, and participant in the funds, to sharing in the future success of InfraRed.”
von Guionneau said: “We are pleased with the extensive support from investors and business partners who share ourexcitement that the spinout will enhance our ability to capture attractive opportunities available to us as an independent business. We will retain our value-add investment philosophy and ensure that our business culture remains unchanged. These have been instrumental to our success over nearly two decades.”
In addition to the China fund, InfraRed will also manage the HSBC European Active Real Estate Fund, a €400 million fund focused on European investments with a value-added strategy; HSBC Infrastructure Company a FTSE 250-listed investment company with a market capitalization of about £700 million, focused on social infrastructure public finance initiatives and Public/Private Partnerships in Europe; HSBC Infrastructure Fund II, a £300 million fund which is fully invested in infrastructure assets around the world; HSBC Infrastructure Fund III, a successor fund with a similar investment strategy targeting $1 billion. That fund has closed on $580 million to date; HSBC Environmental Infrastructure Fund, a €235 million fund targeting infrastructure assets in Europe during the development phase.