HSBC Life HK to increase allocation to private credit
HSBC Life Hong Kong is planning to increase its exposure to private credit as part of a broader private markets push to capitalise on high interest rates.
The insurer’s chief investment officer William Chan told AsianInvestor that it will deploy up to $1.5bn (£1.2bn) into private credit annually and up to $2bn to private equity.
This is up from the previously planned $1bn each year to the two asset classes.
Read more: Lloyd’s launches new US direct lending fund
Chan said that private credit has been offering the insurer – which manages around $12bn in alternative assets – “exceptional” risk-adjusted returns.
“The return on risk just stands out among all asset classes,” he said. “And it is indeed why we are deploying a significant amount of new capital into priate credit.”
Read more: Private credit returns beat private equity
The insurer’s core private credit exposure is in the US and Europe, where it focuses on unrated senior secured direct lending. Chan reportedly said that the Asian market is not as mature, with limited opportunities.
HSBC Life Hong Kong is also planning to expand into energy transition infrastructure debt. In January 2023, HSBC Asset Management, which manages the insurer’s assets, added Green Transition Partners – a specialist company focused on energy transition infrastructure – to its Asia alternative investment team.
HSBC Life Hong Kong also makes direct private credit investments in loans originated by HSBC’s global banking network, which Chan said provide a “very good” return on risk.
The global private debt market is booming. Industry research provider Preqin forecasts that private debt assets under management will grow to an all-time high of $2.8trn by 2028.
