HSBC Private Equity is set to buy itself out from its parent bank in a deal reported to be worth GBP50 million. The bank is said to be retaining a 20 per cent stake in the business after the management buyout, which is expected to complete by mid-November. Chris Masterson, who replaced Ian Forrest as head of HSBC Private Equity in 2000, will lead a team of directors, thought to number around 27, in buying out the firm. HSBC Private Equity said it is unable to comment until the deal has been finalised. It is understood that HSBC Private Equity will maintain an exclusive relationship HSBC.
Rumours that the business was to be sold began in May when it emerged HSBC was investing $750 million in a fund being raised by New-York-based private equity firm, AEA Investors. This was perceived to have created a conflict of interest and initiated speculation about an MBO that would enable HSBC to focus on corporate and retail banking. The bank reported a drop in pre-tax profits for the first half of the year and has lost several high-profile members of its investment banking division.
It has already been a busy year for HSBC Private Equity, which raised GBP1.2 billion for its second European buyout fund this spring. Half of this funding came from the bank and half came from third party investors, from which HSBC will need to gain approval for the buyout. Earlier in 2002 HSBC merged its venture capital arm, HSBC Ventures, with the weightier and more senior HSBC Private Equity division in what may well have been a preparatory consolidation of the bank’s activities in this area.
In HSBC Private Equity’s 34-year history the firm has invested over GBP1 billion in more than 400 companies. The group has eight European offices as well as operations in the Asia-Pacific region and North and South America.