HSBC plans venture debt fund for Indian startups

Mumbai: Hong Kong and Shanghai Banking Corp (HSBC), Europe's largest bank by assets, is contemplating launching a venture debt fund in India in what could be an extension of its fledgling loans business for startups, according to two persons directly aware of the matter.
The plans, whenever they fruitify and if the regulator gives a go ahead, would make HSBC the first commercial bank to float a venture debt fund for startups in India.
The exact timeline, the size, and the structure of the fund are yet to be firmed up, the sources said.
"We hope that we can get it up and running in the next six months though no timeline has been set," one of them said. "The plans are still at an early stage and no targets have been set as yet, but it will complement the bank's existing
startup financing
business."
A spokesperson for the London-based bank declined to comment.
A venture debt fund enables startups to raise funds without diluting equity, often at a cheap price in early stages.
The sources spoke on condition of anonymity because the plans are still private.
A top industry official pointed out that HSBC is already offering venture lending although it does not have a specific venture debt fund yet. "They (HSBC) have been trying to do something for some time," the official said.
The bank launched the venture debt business last year after it hired former Silicon Valley Bank (SVB) executive Pete Scott.
HSBC took over the UK operations of SVB for a token amount of £1 in a fire sale led by the UK government and central bank to protect UK tech firms after the US bank collapsed in March 2023. It was the second-largest bank failure in US history with total assets of $209 billion, according to S&P Global. The proposed fund in India would be an extension of HSBC's startup banking practice that began in the country three years ago. In three years, it has allocated $600 million for various banking products tailored to the working capital needs of startups.

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