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HSBC introduces new venture debt offering and Asean growth fund aimed at Singapore’s new economy businesses

Felicia Tan
Felicia Tan • 4 min read
HSBC introduces new venture debt offering and Asean growth fund aimed at Singapore’s new economy businesses
The latest funds complement the bank’s existing US$200 million new economy lending fund, which was launched in 2021. Photo: Bloomberg
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HSBC, on March 27, announced the launch of two products targeted at new economy businesses.

The first is the US$150 million ($202.5 million) venture debt offering, that’s targeted at high-growth companies in Singapore that are backed by venture capital or private equity investors. The product will provide a flexible financing solution to support a range of funding requirements such as capital expenditure (capex), runway extension or working capital for up to three years in tenor.

At the same time, the bank announced the launch of its US$1 billion Asean growth fund for Singapore-based digital platform businesses supporting e-commerce in the region. The fund, which is said to be the first of its kind, will help such businesses achieve economies of scale across multiple international markets, grow their asset portfolios and advance along the corporate lifestyle, says the bank.

Both the venture debt offering and the Asean growth fund complement the bank’s existing US$200 million new economy lending fund, which was launched in 2021. The new economy lending fund supports the working capital needs of early-stage start-ups in Singapore.

“Singapore has a thriving ecosystem of start-ups, investors and accelerators which HSBC is part of. A common pain point we hear from start-ups is finding the right financing partner that understands their needs and can support them throughout their growth trajectory – from access to knowledge to skills and funding to strategic partnerships and network for their global expansion,” says Priya Kini, HSBC Singapore’s head of commercial banking.

“We know that profitability may not always reflect a company’s potential in its early stages. That is why we take a long-term view of potential growth by evaluating companies based on historical portfolio performance, key operating metrics, growth plans and customer acquisition strategies,” she adds.

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Meanwhile, HSBC’s head of commercial banking for South and Southeast Asia, Amanda Murphy notes that the bank is excited about Asean’s booming digital economy.

The region’s digital economy is one of the fastest-growing ones in the world with a compound annual growth rate (CAGR) of 16%. The sector was worth US$218 billion as at 2023 and is expected to reach US$600 billion by the end of the decade.

In addition, based on HSBC’s recent survey of 600 companies operating in Southeast Asia, most of the respondents – 42% of them – indicated that “digitalising operations” in their top business priority. This is followed by “growth in Southeast Asia” and “research and development” at 40% and 37% respectively. The survey ran from Feb 14 to 27 this year.

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To capture the growth in the booming digital economy, 65% of respondents say they plan to increase their investment in the digitalisation of their businesses.

The same survey also found that a majority – or 86% - of Singapore-based firms plan to expand into more Asean markets in 2024. Around half – or 46% - of Singapore businesses also plan to invest further into digitalisation of their operations as a lever for expansion.

“With a working population that is digitally native, increasing in size and poised to consume more goods and services – especially on e-commerce – Asean has so much potential for growth,” Murphy adds.

At a media briefing on March 27, Murphy revealed that the funds will come from HSBC’s balance sheet.

“We’re very fortunate we have a strong balance sheet in Asia. We have a strong balance sheet as a group. We are keen to support the growth of the economies that we operate in,” she says.

When asked about the difference between all three products, Kini suggests companies think of them as a “continuum” in that each product will meet each start-up’s needs at different stages.

She adds that there is no minimum ticket size for all three products as the bank aims to offer flexibility to its customers, preferring to structure their products based on each company’s requirements.

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