HSBC says it is contributing funding and expertise to a new initiative to help growing businesses in Australia achieve their potential.
The bank is a founding shareholder, alongside ANZ, CBA, NAB, and Westpac in the A$540m (about US$364m) Australian Business Growth Fund, which will make direct investments in small and medium-sized enterprises. As well as contributing AU$20m in funding, HSBC is providing the expertise it has gained from participating in similar schemes in the UK and Canada.
The fund will take minority equity stakes of between A$5m and A$15m in businesses, enabling them to hire employees, undertake research or expand into new markets, for example. This will allow entrepreneurs to raise capital while retaining overall control of their companies.
“This is about filling a gap in the market,” said Noel McNamara, interim CEO of HSBC Australia. “Debt finance is not always the most appropriate funding option for all business models, and small companies may be unable to secure venture capital on terms they find acceptable. The fund provides an additional avenue to help them expand.”
The fund is a collaboration between the Australian government and private sector. The government and the four Australia-headquartered banks have provided the bulk of the capital, putting in A$100m each.
HSBC played a role in setting up the UK Business Growth Fund in 2011. This has now made investments worth more than £2bn (around US$2.6bn) in nearly 300 companies. These cover a broad range of sectors and business models, including professional services, online retail, manufacturing and materials, hospitality, waste management and recycling.
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