HSBC launches $1.5bn debt fundraising drive

The two global debt funds are the first launched by the unit since it established an infrastructure division in 2016.

HSBC Global Asset Management has launched its first two infrastructure debt funds with a combined target of $1.5 billion.

The London-headquartered institution has launched HSBC Senior Global Infrastructure Debt Fund, a vehicle targeting investment-grade assets across the infrastructure spectrum, the focus of the HSBC platform to date. In tandem, HSBC has also launched HSBC Global Infrastructure Debt Fund, which will target higher-yielding investments.

Both funds will target $750 million and do not have a hard-cap, HSBC confirmed. However, HSBC declined to disclose the targeted returns for either vehicle. A first close is planned for later this year, with further closings planned for the 18 months following.

The launch of the two funds represent HSBC’s first foray into the infrastructure debt fund market since the unit was set up in 2016. It is led by Glenn Fox and has since invested $1.3 billion, largely on behalf of Asia-Pacific investors, including AIA Group.

Speaking at our 2019 Debt Roundtable, Fox told of the challenges posed for infrastructure debt fundraises.

“Our experience has been that the bigger investors are able to commit significantly more capital to a segregated mandate than they are to a fund,” he said. “The challenge for us is to find a strategy for a fund that has sufficient appeal to a wide enough base of investors to be scalable. I think a lot of people have found that difficult in the infrastructure debt market.”

A report by Fitch Ratings last week revealed that the number of infrastructure downgrades in the first half of 2020 has more than tripled the number recorded in the whole of 2019, rising to 62 from 18. Included among these were 15 investment-grade assets relegated to non-investment grade, predominantly in the transport sector. The previous record for infrastructure downgrades in a single year was 58 in 2011.

To get the latest on the global debt market, watch our latest Global Summit On-Demand webcast featuring CDPQ‘s Jonathan Duguay-Arbesfeld; Asset Management One Alternative Investments‘ Cun Yu (Jack) Wang; Ayres Partners’ founder Matias Sottile; and the World Pensions Council’s M Nicolas J Firzli, speaking in a personal capacity.