HSBC raises latest fund to house private equity fund stakes

Private Equity Opportunities III closed on $738m and includes $100m for new commitments.

HSBC Asset Management has closed its third secondaries transaction involving moving private equity exposure into a closed-ended vehicle.

The UK headquartered institution once again teamed up with HarbourVest Partners, which was a lead backer on the deal, according to a statement. Other investors in the vehicle include clients of HSBC Private Banking and HSBC Asset Management’s institutional clients.

The transaction took three months to complete with Private Equity Opportunities III closing on $738 million in March.

The fund houses 11 private equity fund stakes and includes $100 million of follow-on capital for new commitments to blue chip private equity funds and co-investments, the statement said.

“The success of our third Private Equity Opportunities fund underlines the importance of secondary funds in the private equity ecosystem,” Joanna Munro, chief executive of HSBC Alternatives, said in the statement, adding macroeconomic and market volatility created a “compelling opportunity” for secondaries buyers to acquire its exposures “at attractive pricing levels”.

The vehicle brings total commitments to HSBC Asset Management’s private equity opportunities programme to around $3.2 billion following the close of its two predecessor vehicles in 2020 and 2021.

HarbourVest led the bank’s process for the first Private Equity Opportunities fund, Secondaries Investor and affiliate title Buyouts previously reported. It sold $1 billion of private equity exposure from its principal investments portfolio into a closed-ended vehicle in a deal which was targeting $1.4 billion, Secondaries Investor reported in 2021. The fund had held an interim close on $1.34 billion in December that year.

HSBC then returned to market that year with a process to move private equity interests into a specially created vehicle that would allow the bank’s private equity team to continue making fund and direct investments, Buyouts reported.

Such deals can allow large organisations to shift private equity into specially created vehicles that provide more space and fresh capital to continue building out their strategy. Canadian pension system PSP Investments also was working on a similarly structured deal in 2021 with HarbourVest, Buyouts and Secondaries Investor reported.