HSBC Raises $525 Million Asia Fund

The HSBC Group’s new Asian fund, HSBC Private Equity Fund 2, closed in January on $525 million (ecu 485 million), just over its original half-billion-dollar target.

US institutions stumped up three quarters of this total, with the balance spread between Asian, Australian, European and Middle Eastern investors. US participants named by David Conrod, director of sales and marketing of HSBC Asset Management Americas, included the Colorado Public Employees’ Retirement System, the US West pension fund, New York Life and Traveller’s Company.

A Good Time To Invest

Confirming that participants in the fund had not been deterred by the recent upheavals in some Asian markets, David Conrod said “I think they think it’s a good time to be looking in the region”.

Perhaps fortunately, in the light of developments this winter, the fund got off to a slow start, investing only around $25 million since its first closing last April. Now, David Conrod believes “the fund’s timing couldn’t be better,” since the Asian financial crisis is expected to boost the flow of investment opportunities.

As a later-stage Asian fund, the vehicle was originally expected to have a strong bias towards expansion capital, in view of the relative immaturity of the region’s buyout markets. Recent events suggest that this bias could well tip towards restructuring deals as Asian businesses seek to refinance bank debt to ride out the storm.

Up to 40% of HSBC Private Equity Fund 2 is slated for investment in China, including Hong Kong. Its other primary investment areas are Indonesia, Malaysia, Singapore, Taiwan and Thailand, but the fund many invest no more than 30% of its capital in any one of these markets. Investment in secondary target markets in South East Asia, including Korea and the Philippines, is restricted to a total of 15% of the fund.