Graycliff Partners spins out of HSBC Capital

The latest group to spin out of HSBC will focus on private equity, mezzanine and real estate investments in the US and Latin America.

HSBC Capital’s Americas private equity team has spun out to form Graycliff Partners, an investment firm that will focus on mid-market private equity, mezzanine and real estate investments.

Graycliff will continue to manage and invest more than $1 billion in commitments from its existing funds, including a $300 million US buyout fund that closed in 2007 and a $200 million Latin American buyout fund that closed in 2009. The firm’s US mezzanine portfolio and real estate activity are each approaching roughly $200 million in the aggregate, Graycliff managing director Jim Marley told Private Equity International.

“We’re actually quite encouraged by some of the opportunities we’ve seen in real estate,” Marley said. “We made some investments post-crisis and just in this past quarter have had two exits from deals like that: a commercial real estate opportunity in Brooklyn, New York and a distressed residential investment opportunity in Phoenix, Arizona. We think on a selective basis there are a lot of very interesting opportunities in certain markets within the US.”  

The Graycliff team anticipates managing a new generation of funds with similar mandates in the future, Marley added.

“I’d say sometime within the next two years it’s likely we’ll be considering looking at [raising] similar funds.”

Graycliff Partners marks the latest HSBC spinoff in a number of captive team departures from the bank. Last week, a group of HSBC Bank Canada professionals has spun out to launch independent firm Fulcrum Capital Partners. Earlier this year, a global infrastructure group now known as InfraRed spun out, and in December 2010 Headland Capital Partners spun out of HSBC Private Equity (Asia).

Graycliff is comprised of 16 investment professionals, 13 of which are based in the firm’s New York headquarters, with the remaining three in Sao Paulo, Brazil. Many members of the Graycliff team previously worked together at both Midland Montagu Private Equity and HSBC Capital.