Details are sketchy, but it seems the private-equity group at HSBC Canada is set to be acquired by the management team. It’s understood talks are considerably advanced and the deal for the sale of HSBC Capital (Canada) Inc. – which has offices in Vancouver, Calgary, Edmonton and Toronto – could be announced within the next month.
“It’s out there,” noted one source in the world of mezzanine finance. HSBC declined to comment Friday.
According to its website, HSBC Capital has been around since 1998 and is working on investing its fourth fund. In all, institutional investors and HSBC Bank Canada have committed $300-million to those funds. Most of the commitments have come from outside investors. HSBC Capital is the manager of the general partner and invests in a range of situations, including, management bu-outs, leveraged buyouts and pre-IPO rounds of equity financing.
In the new hived-off HSBC Capital, it’s understood that it will manage funds that offer private equity, bridge debt and mezzanine finance to mid-market companies. The latter is a type of capital where the investor receives an interest coupon plus an equity participation that can boost the return to the 15%-20% range.
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