HSBC to spin out private equity, RE businesses

The bank is considering selling five of its private equity fund management businesses, one of which invests in real estate properties throughout the US and Latin America. The potential moves comes as a result of the changing regulatory requirements of the banking industry.

HSBC is considering selling five of its private equity fund management businesses to their respective management teams as part of a global initiative “to meet the requirements of a changing regulatory environment”, according to a person familiar with the situation.

The management businesses in question are HSBC Private Equity Asia in Hong Kong, HSBC Specialists Investments in the UK, HSBC Capital in the US, HSBC Capital Canada and HSBC Private Equity Middle East. The funds in question manage $8.8 billion of assets.

HSBC Capital USA, the bank’s US and Latin American private equity arm established in 1991, manages $1.6 billion in capital commitments and is focused in private equity, mezzanine and select real estate markets throughout the US and Latin America. If sold, that firm’s longtime investment team will remain in place, with “little to no change in the way the business operates”, according a source familiar with the matter.

HSBC will continue to own 20 percent of these businesses, retaining board representation and playing a supportive role as a significant investor in the funds, a source told PERE.

Additionally, independently listed vehicle HSBC Infrastructure said the bank had agreed to terms to spin out its infrastructure and real estate investment arm, HSBC Specialist Investments, Reuters reports.

In 2003, HSBC spun off its European buyouts business and retained a minority stake in the firm, which later became Montagu Private Equity.