HSBC Said to Be Creating New Team for Tough Infrastructure Deals
(Bloomberg) -- HSBC Holdings Plc is setting up a dedicated team to finance infrastructure projects that would typically struggle to attract capital from other sources, according to people familiar with the matter.
The corporate and institutional banking unit is looking for a global head of strategic financing partnerships, the people said, asking not to be named discussing private deliberations. HSBC started searching for someone to fill the role, which may be based in the US, a few months ago but has yet to settle on a candidate, they said. The role will report to Danny Alexander, who is chief executive of infrastructure finance and sustainability within HSBC's CIB unit, they said.
A spokesperson for HSBC declined to comment.
The new hire will build out a small team globally that will focus on so-called blended finance deals for infrastructure projects that pool together concessional and commercial capital, the people said.
Blended finance is intended to channel a combination of private and public funds into sustainable projects, mostly in developing countries. A key challenge around such projects, however, is coming up with a risk-reward structure that can lure adequate levels of private capital.
HSBC's new team will be tasked with establishing partnerships that are similar to a Singapore-based debt financing platform called Pentagreen Capital, one of the people said. Pentagreen, which HSBC established back in 2022 together with state investment fund Temasek Holdings Pte., is targeting assets related to renewable energy, storage, water and waste treatment as well as transport infrastructure.
Citigroup Inc. and Sumitomo Mitsui Banking Corp. are among other lenders targeting new deals in the market for blended finance. Such transactions totaled $18 billion last year, down 21% from 2023, according to a report by data provider Convergence published in May. Blended finance faces a decline in public spending as the US pulls back from many of its developmental aid commitments.
HSBC is creating its new blended-finance team as other parts of the bank undergo considerable upheaval. That includes a global restructuring program to cut costs by about $3 billion, a plan that includes ending businesses such as equity underwriting and advisory services outside the bank's core operations in Asia and the Middle East.
--With assistance from Alastair Marsh.
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