HSBC launches $150m venture debt product for high-growth scale-ups in Australia
HSBC is introducing a venture debt offering in Australia to help scale-up companies that might otherwise struggle to attract more traditional forms of funding to achieve new growth.
HSBC launches venture debt offering in Australia
Launching this month, the bank has allocated $150 million (AUD 227 million) to lend between $6.6 million and $19.8 million to late stage venture capital-backed companies operating in the technology and new economy sectors.
Venture debt forms an attractive alternative to equity investment for high-growth companies, as it offers a non-dilutive form of capital that preserves ownership stakes without the need to forego additional equity.
Compared to traditional bank loans, venture debt can also be delivered quicker and typically with more favourable repayment terms.
It is a space that has remained markedly vacant within the Australian scale-up market, especially given high inflationary environments and the lack of serious partners to the sector since the collapse of lender Silicon Valley Bank.
HSBC plans to bolster its newfound product by granting start-ups access to “a specialised banking service” containing a range of APIs, digital payment and onboarding solutions, as well as the HSBCnet digital platform for commercial banking.
Speaking on the launch, Alan Watters, HSBC’s tech sector lead for Australia and New Zealand, says it will enable the bank to “increase the specialised support we provide to innovative companies who need flexible, long-term, and trusted banking relationships”.
It is the flexibility associated with venture debt which the bank is hoping will enable recipients to “capitalise on opportunities as they arise”.
The launch this month marks HSBC’s latest attempt to reposition its foothold in the APAC region. In September, it sold its billion-dollar mortgage portfolio in New Zealand to Australian non-bank lender Pepper Money, but then agreed to purchase Citi’s retail wealth management portfolio in China the following month for $3.6 billion.
