HSBC (NYSE: HSBC) Launches $150m Venture Debt Product

28 nov. 2023

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.

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.

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.

Price Momentum
HSBC is trading near the top of its 52-week range and above its 200-day simple moving average.

What does this mean?
Investors have been pushing the share price higher, and the stock still appears to have upward momentum. This is a positive sign for the stock's future value.