HSBC is increasing its presence in the private credit market with a $4 billion investment in its asset management division. The bank aims to expand its alternative credit funds and attract external investors, scaling up its credit platform to $50 billion within five years. This move is part of a broader industry trend to dominate the private credit market, traditionally led by asset managers.
The new capital will support direct lending opportunities in the UK and Asia. In November 2024, HSBC launched a venture debt strategy targeting annual returns of 15 to 18 percent, seeking to raise $500 million from investors. This expansion aligns with HSBC's broader restructuring plan, aiming for a simpler and more agile business model.
The private credit market is rapidly expanding and could reach $2.8 trillion by 2028, according to Morgan Stanley. HSBC's strategy reflects Chief Executive Georges Elhedery's overhaul of the bank, which includes cost-cutting measures and a business division into eastern and western markets.