Direct Lending
Direct lending has experienced significant growth since the wake of the financial crisis to become a key source of capital for leveraged loans, as many banks retrenched from the market due to increased regulation and more stringent capital requirements. Direct lending provides potentially attractive risk-adjusted returns, portfolio diversification benefits, and low mark to market volatility when compared to the broader credit market.
A Different Approach to Direct Lending
A Different Approach to Direct Lending
Partnership with HSBC Bank
- HSBC Bank has a well-established proprietary origination platform across the UK and Europe.
- Full access to loan origination opportunities provides HSBC Asset Management clients with accelerated deployment and enhanced credit selectivity.
Distinct Gap in the Market
- Most direct lending fundraising has been with stretched senior and unitranche-focused strategies, whilst the lower risk 'Senior' segment is comparatively underserved.
- We focus on the lower risk mid-market, which represents the original investment thesis of direct lending in Europe.
Disciplined Underwriting Process
- Investing at pace in lower risk loans with potentially attractive pricing.
- Focus on defensive, differentiated, and potentially high growth business models that we believe will be well positioned through the credit cycle.
Any views expressed were held at the time of preparation and are subject to change without notice. While any forecast, projection or target where provided is indicative only and not guaranteed in any way, HSBC Alternative Investments Limited accepts no liability for any failure to meet such forecast, projection or target.
Investment case studies
AirIT
A provider of managed IT support, cybersecurity, and digital transformation services for small and medium businesses.
Sector - IT Services
Type of Transaction - Refinance
Private Equity Sponsor - August Equity
GL Education
A provider of independent student-level formative and diagnostic assessments.
Sector – Consumer services
Type of Transaction – Recapitalisation
Private Equity Sponsor – LLCP
Avantia
A tech-enabled broker and Managing General Agent providing distribution and underwriting of home insurance.
Sector – Insurance
Type of Transaction – Management buyout
Private Equity Sponsor – ECI
Ridge
A multidisciplinary property services and consulting business, serving public and private sector clients across a range of industries.
Sector – Real Estate Services
Type of Transaction – Management buyout
Private Equity Sponsor – Horizon
TopSource Worldwide
An employment compliance group providing end-to-end solutions in outsourced payroll services, Employer of Record, and HR management.
Sector – Professional Services
Type of Transaction – Refinance
Private Equity Sponsor – Horizon
Leadership
|
Scott McClurg Head of Private Credit |
Tom Green Head of Direct Lending UK & Europe |
Barry Mackay Head of New Investment |
Steve Hewes Head of Portfolio |
|
Carmen Gonzalez- Calatayud Senior Investment Specialist |
Tom Boden Investment Director |
Will Giardini Investment Director |
Laura Repko Investment Director |
Contact us
Key Risks
Further information on the potential risks can be found in the Prospectus or Offering Memorandum.
Risk Considerations. There is no assurance that a portfoliowill achieve its investment objective or will work under all market conditions. The value of investments may go down as well as up and you may not get back the amount originally invested. Portfolios may be subject to certain additional risks, which should be considered carefully along with their investment objectives and fees.
- Illiquidity: An investment in the Fund is a long term illiquid investment. By their nature, the Fund’s investments will not generally be exchange traded. These investments will be illiquid.
- Long term horizon: Investors should expect to be locked-in for the full term of the investment.
- Economic conditions: The economic cycle and prevailing interest rates will impact the attractiveness of the underlying investments. Economic activity and sentiment also impacts the performance of underlying companies and will have a direct bearing on the ability of companies to keep up with interest and principal repayments.
- Loans to private companies: The Fund will invest in loans to medium sized privately owned companies. There are specific risks associated with lending to such companies, including that they may have limited financial resources, access to capital and higher funding costs. They may also be more vulnerable to market, key-man and other risks and their accounts are not typically published.
- Valuation: These investments may have no or a limited liquid market, and other investments including those in respect of loans and securities of private companies, may be based on estimates which cannot be marked to market until sale. The valuation of the underlying investments is therefore inherently opaque.
- Fund Risk: Investments into this Fund may, among other risks, be negatively affected by adverse regulatory developments or reform, credit risk and counterparty risk. The credit market bears idiosyncratic risks such as borrower fraud, borrower bankruptcy, prepayment risk, security enforceability risk, subordination risk and lender liability risk.
- Investor’s Capital At Risk: Investors may lose the entirety of invested capital.