HSBC sells infrastructure and real estate fund unit to managers

The management team of HSBC’s real estate and infrastructure fund management division has bought a controlling stake in its unit from the bank, and renamed it InfraRed Capital Partners.

The move adjoins a trend among banks to offload other specialist units, such as hedge funds, as capital adequacy rules and regulations make these less attractive to own.

After its transaction, for an undisclosed sum, HSBC will retain a 19.9% stake in InfraRed, which it acquired in 2000.

The buy-out of the operations, which run over $4bn in equity capital, comes on the heels of the bank announcing last year it would spin out its private equity fund management.

Werner von Guionneau, InfraRed’s chief executive, said: “Since we began the spin-out process last year the business has remained extremely active, completing a number of significant transactions across all the funds that we manage.

“The spin-out will enhance our ability to capture attractive opportunities available to us as an independent business. We will retain our value-add investment philosophy and ensure that our business culture remains unchanged.”

HSBC remains an investor in the existing funds and, on a case by case basis, will consider commitments to future funds raised by InfraRed.

Documents released announcing the buy-out added HSBC “will not compete with existing funds, and funds currently being raised by [InfraRed] and, if appropriate, will continue to refer potential investment opportunities for consideration.”

For over 15 years InfraRed has invested in, developed and operated real estate and infrastructure assets worldwide. Its 80 staff are spread between London, Hong Kong, New York, and Paris.

It has raised 11 funds, and listed an investment company in London.

The latter, HSBC Infrastructure Company Limited, has been renamed HICL Infrastructure Company Limited. The £700m portfolio sits within the UK mid-cap index, and has assets including the Dutch high speed rail link, and headquarters of Britain’s Home Office.

InfraRed also has HSBC Infrastructure Fund II (now InfraRed Infrastructure Fund II), a £300m fund invested in such assets as the Tyne Tunnel.

There is also InfraRed Infrastructure Fund III, which has so far closed $580m of a targeted $1bn of equity commitments from investors.

The €235m InfraRed Environmental Infrastructure fund has investments in solar power in Spain and Italy, and water and waste treatment, among other commitments.

InfraRed European Active Real Estate fund has about €400m assets invested in UK and European commercial real estate.

Finally, the $710m InfraRed NF China Real Estate fund, as its name suggests, invests in real estate development opportunities in China.

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