MUMBAI: Global banking major HSBC is looking to get into funding real estate development in India through the FPI route. It might also enter the private debt space in other sectors as well, sources said.
“They are big in Asia in real estate private debt. They want to explore it in India,” the source said. Currently, HSBC is evaluating three to four such deals in real estate and planning to sign at least one in this quarter.It wants to invest between `250-500 crore in each project.
An email sent to HSBC did not elicit any response.
The FPI route is more flexible in terms of land financing, pre-approval financing, stuck projects and others, which is not possible through banking channels currently, due to the Reserve Bank of India guidelines.
HSBC India’s overall wholesale lending book stood at $ 15.3 billion in H12023, up from $ 13.319 billion in December 2022, the bank said.Wholesale lending included a $10.3 billion exposure under the corporate and commercial book, $5 billion to non-banking finance companies and $ 1.9 billion to the real estate sector.
Globally, HSBC Holdings is assembling a team of bankers to connect its corporate clients with the rapidly expanding world of private credit , Bloomberg reported last week.
The lender will tap into the many relationships it has with mid-sized companies around the world to link them up with private debt funds, arranging and sometimes taking part in the financing deals that ensue, the news agency said , quoting Vinay Raj, a managing director at HSBC who is helping spearhead the effort.
HSBC’s foray into Indian private credit comes at a time when global investors such as Carlyle, Franklin Templeton and others are evaluating deals in this space. Varde Partners, Oaktree Capital, PAG, Apollo Global Management and others are actively doing deals in the space.
Some of them lend though both alternative investment fund as well as FPI channels.
India-focused assets under management for private debt nearly doubled to $15.5 billion as of December 2022 from a year ago, according to financial data provider Preqin.
Between them, the global credit and distressed funds have lent between $5-8 billion in Indian real estate in the last couple of years, especially after the IL&FS crisis, post which non-banking finance companies or NBFCs reduced lending to real estate to clean up their balance sheets and shore up the liquidity, experts said.
The Indian real estate debt market is Rs 1 trillion and domestic fund managers deploy between Rs 2,500-3,000 crore every year, so global credit funds are tapping the space to a great extent, experts added.
Source: The Financial Express