HSBC, a prominent global bank, is venturing into real estate development funding in India using the foreign portfolio investment (FPI) route. Moreover, the bank intends to expand its presence in the private debt market beyond the real estate sector in the country. As per a reliable source, HSBC has already established a substantial presence in the real estate private debt market in Asia and is eager to explore similar opportunities in India.
Presently, the bank is evaluating multiple real estate transactions and plans to finalize at least one deal in the current quarter. These investments are expected to range from Rs 250 crore to Rs 500 crore per project. The FPI route offers increased flexibility for land financing, pre-approval financing, and addressing stalled projects—opportunities that are often not feasible through conventional banking channels due to Reserve Bank of India guidelines.
In the first half of 2023, HSBC India reported an overall wholesale lending portfolio worth $15.3 billion, a notable increase from $13.319 billion in December 2022. This portfolio encompassed a $10.3 billion exposure in the corporate and commercial sector, $5 billion in non-banking finance companies, and $1.9 billion in the real estate sector.
Internationally, HSBC Holdings is proactively assembling a team of bankers to facilitate connections between its corporate clients and the rapidly growing private credit market. The bank aims to leverage its extensive network of relationships with mid-sized companies worldwide to facilitate their access to private debt funds, and it may even participate in financing deals. Vinay Raj, a managing director at HSBC, is leading this initiative.
HSBC's foray into the Indian private credit sector aligns with the growing interest of global investors such as Carlyle, Franklin Templeton, and others in this field. Prominent firms like Varde Partners, Oaktree Capital, PAG, Apollo Global Management, and others are actively involved in private credit transactions, utilizing various investment avenues, including alternative investment funds and the FPI channels. The private debt market in India has witnessed substantial growth, with assets under management nearly doubling to $15.5 billion as of December 2022 compared to the previous year, as reported by financial data provider Preqin.
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