HSBC Builds Private Equity Biz
HSBC Republic Investments is setting up a private equity business and plans to launch its first offering, likely a fund-of-funds, in the second half of the year.
HSBC Republic Investments is setting up a private equity business and plans to launch its first offering, likely a fund-of-funds, in the second half of the year. This will be the first major move into the asset class for the arm of the private bank that manages funds-of-hedge-funds and comes at a time when an increasing number of hedge fund firms are getting into private equity. “We’ve got the hedge fund business; it seems a good idea to bring in another alternative asset class,” said Jamie Murray, head of marketing in London.
“There’s a clear recognition that [private equity] is an asset class demanded by clients,” noted Boudewijn Jansen, global head of product development and deputy ceo. HSBC Republic has just received board-level approval and will build a team to develop the business. Jansen said he is seeking two analysts—one senior, the other likely a graduate. There are no immediate plans to develop an in-house capability for managing single private equity funds.
“A medium-term goal will be to offer building blocks [allowing clients to invest] on a geographical and sector basis,” said Jansen, comparing the approach to that taken when creating the firm’s AdvantEdge range of funds-of-hedge-funds. This could take three years or more, he cautioned. As well as funds of private equity funds, HSBC Republic is likely to offer investment in individual managers. For example, the firm has identified a private equity manager focused on Brazil. “We’re considering whether we could do a syndicate where the private bank could feed into the fund,” said Jansen.
Separately, the firm recently teamed up with Bear Stearns for a fund of private equity funds, which had its first closing in September. Jansen declined to elaborate, citing U.S. regulatory issues. Other hedge fund-focused firms have begun to look at making a move into private equity recently. These include Geneva-based commodity fund of funds firm FourWinds Capital Management.