HSBC Private Equity in buyout talks

The management of HSBC Private Equity are reported to be in talks with its parent, HSBC, to buy out the European private equity operation.

HSBC, the largest bank in the UK, is reported to be in early stage discussions with the management of its private equity operation, HSBC Private Equity, about selling the firm to the team, according to the Financial Times.

The discussions have been forced on the bank due to its planned investment in AEA Investors, the New York based private equity firm. The bank is reported to be investing $750m in the fund. The investment would create a conflict of interest for the bank as it would mean that the bank would own a direct competitor.

AEA was founded in 1969 to manage money from some high profile families including the Mellon, Rockefeller and Harriman families. It has sourced capital to date from high net worth individuals.

The buyout discussions are being led by Chris Masterson, managing director of HSBC Private Equity, and are at an early stage. It is thought that the business will be sold to the management while HSBC will retain a minority stake. The changes come at a time when HSBC Private Equity have just closed their latest fund at £1.2bn – half of this capital was raised from third party investors and half came from the bank.