HSBC commits $3bn to Greater China venture debt fund
HSBC has earmarked USD 3bn for a Hong Kong and mainland China start-up lending programme. It marks the bank’s first foray into venture debt in Asia.
The capital, organised as HSBC New Economy Fund, will target early-stage, high-growth companies that already have VC backing in areas such as climate tech, industrials, consumers, and healthcare and life sciences.
HSBC New Economy Fund is effectively a combination of two existing Greater Bay Area technology and healthcare debt schemes worth a combined USD 1.8bn, plus additional capital. Under the enlarged fund, the bank aims to provide bespoke debt financing solutions, with the capability to include equity warrant instruments within the lending structures.
“Structural shifts driven by imperatives such as the transition to net zero, the fourth industrial revolution and web3 are redefining businesses, regardless of their industry and size,” Frank Fang, general manager and head of commercial banking Hong Kong and Macau at HSBC (pictured), said in a statement.
“New economy companies are set to play a more pivotal role in stimulating economic growth. With ever growing links with mainland China, Hong Kong will continue to be the preferred gateway bridging global capital to China’s growth story.”
It reflects rising interest in private debt investment in Asia as public and private equity markets warble in a generally uncertain macro backdrop. For early-stage companies, the phenomenon is primarily about extending runway rather than valuation concerns, although avoiding down-rounds through debt-focused bridge rounds is a distinct theme.
HSBC is an active investor in regional private equity and venture capital funds as well as a direct investor in those funds’ portfolio companies. It also offers start-up ecosystem support in the form of HSBC Business Go, digital business advisory platform, as well as through support for initiatives such as Alibaba Entrepreneur Fund’s Jumpstarter 2023 Global Pitch competition.
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