HSBC Private Equity has launched a GBP108 million European technology fund. The fund was first announced last year and is set to focus on emerging technologies and the “New Economy”. This represents a shift in HSBC’s investment policy which has previously favored Old Economy industries such as engineering, chemicals, electronics, transport and health care. Although this specialization will persist, HSBC is now also looking for high growth opportunities in technology, media and telecoms.
Andy Thesen, head of technology investments at HSBC said: “The fund is a natural extension of our existing activities and represents a planned entry into a sector of the private equity market which has become attractive given the liquidity in the quoted equity markets”. The team responsible for managing the technology fund will also include Dan Alexander and Mahmoud Atalla, who both joined HSBC PE last year.
It is anticipated that the retail, corporate and investment banking franchises of the HSBC group will provide the fund with a proprietary deal flow. The fund, which has been raised from HSBC and external investors, is looking to make investments in the region of GBP1 million to GBP5 million. Although the majority of these companies are likely to be European, the fund will also consider opportunities from further afield, as already illustrated by the investment in Japanese software company, Ecoss. Investments made so far have ranged from early to late stage development capital. HSBC maintains that the calibre of the management team will remain a deciding factor when looking at potential deals.
Adopting a measured approach to TMT investments, the fund has made four investments and two follow-ons to date. These include the lead position in a GBP9 million funding round for Searchspace, a company which develops software to detect fraud and money laundering. It was announced this month that HSBC provided the U.K. company, which has previous backing from 3i, with GBP5 million. Another HSBC-led deal was the second round financing of Pocket IT, a Norwegian company providing location based services for the mobile Internet.