(Nov 25): HSBC Holdings plc’s asset management arm is launching a new venture debt strategy, seeking to further diversify its offerings in the rapidly expanding US$1.60 trillion (RM7.14 trillion) private credit market. 

The strategy will invest in senior secured loans to growth- and late-stage technology and life-sciences companies that are backed by venture capital firms, according to a statement on Monday. 

The strategy aims to raise at least US$500 million from investors, targeting annual returns of 15% to 18%, Scott McClurg, HSBC AM’s private credit head, said in an interview. HSBC AM will source the deals together with HSBC Innovation Banking across the US, Europe and the UK.

The bank named Pete Scott as its head of innovation credit, based in San Francisco. Scott was previously the chief credit officer of Silicon Valley Bank’s venture capital unit. 

Europe’s largest bank bought SVB UK for a token £1 last year, after its US parent came close to collapse.

Big banks have for years faced a threat from direct lenders, who can lure away clients and siphon off corporate-loan business. Many banks now partner with big asset managers on private credit deals, while others have built upon long-established private debt franchises in their own asset management units. 

HSBC recently assembled a team of bankers to connect its corporate clients with private credit lenders. It aims to “at least triple” its private credit business to more than US$20 billion in assets under management and advice over the next three to five years, McClurg said.

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