·  HSBC may launch India’s first venture debt fund by a commercial bank.

·  The fund will expand HSBC’s $600M startup banking portfolio in India.

·  Initiative follows HSBC’s global push after acquiring SVB UK in 2023.

Hong Kong and Shanghai Banking Corp (HSBC), the largest bank in Europe by assets, is considering opening a venture debt fund in India a step that would represent a major expansion of its startup lending business in the country, two people familiar with the move say.

Assuming regulatory approval, the move would see HSBC become the first commercial bank in India to issue a standalone venture debt fund for startups.

Though the final size, structure, and launch schedule are all in negotiation, HSBC officials indicated that it hopes to operationalize the fund in the next six months. "There's no official launch date yet, but the plan is to match it with our existing startup lending business," one of the people said, asking not to be identified.

HSBC has already been engaged in venture lending, albeit not through a formal debt fund. The fund proposed is likely to complement the bank's increasing portfolio of startup-friendly financial solutions.

The bank introduced venture debt in India in the previous year after hiring Pete Scott, a veteran Silicon Valley Bank (SVB) executive. HSBC acquired SVB UK for £1 in a UK government-orchestrated fire sale after SVB's sudden collapse in March 2023 the second-biggest bank failure in U.S. history with $209 billion in assets, S&P Global estimated.

A venture debt fund enables startups to access capital without sacrificing equity, offering financing solutions for early-stage firms at low cost.

HSBC invested $600 million in banking solutions for startups over the last three years, specifically in the working capital requirements of the startups. The suggested fund will be a strategic buildout of that startup banking business.

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