HSBC allots $1 B for ASEAN Growth Fund
British banking giant HSBC is allocating a $1-billion ASEAN Growth Fund to assist countries such as the Philippines in improving and expanding the region’s digital economies which are expected to grow to $600 billion by 2030 from $218 billion in 2023.
In a statement Tuesday, April 2, HSBC said they intend to use the fund to enable the region’s digital platform players to “achieve economies of scale, grow their asset portfolios, and advance along the corporate lifecycle.”
HSBC’S Amanda Murphy, Head of Commercial Banking for South and Southeast Asia, said ASEAN’S booming digital economy needs a lot of attention. HSBC’S first growth fund, she said, will work with digital companies “as they expand in the region and beyond.”
“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,” she said.
The global bank’s ASEAN Growth Fund provides lending to companies that are scaling up through digital platforms across Southeast Asia. It supports new-economy names, more established corporates, and non-bank financial institutions by assessing operating metrics tied to their cashflow-generative asset portfolio, rather than relying solely on traditional financial metrics, according to the statement.
“HSBC has a proud history and strong heritage in ASEAN, including the Philippines, where we have been supporting entrepreneurs and scaling up of businesses, for close to 150 years. The introduction of our latest offerings allows us to better support and open up a world of opportunity to new-economy companies in the Philippines, whether they are start-ups or scale-ups, and as they expand across the region and advance along the corporate lifecycle,” said HSBC Philippines’ Head of Wholesale Banking Mimi Concha.
HSBC noted that Southeast Asia’s digital economy is among the world’s fastestgrowing. As of end-2023, the region’s digital economy is worth $218 billion. It is expected to increase to $600 billion by 2030, at a compound annual growth rate of 16 percent.
The $1-billion ASEAN Growth Fund is for individuals, corporates, venture capital, private equity, and financial institutions.
HSBC plans to allocate $200 million as “new economy fund” for venture capital and private equity with cash or other collateral as security. About $150 million will be released as “venture debt fund” with shares and assets as security, and may also include warrants.
Meanwhile, HSBC said there are more Philippine companies that are planning to expand or have expanded to ASEAN.
It cited a recent survey it conducted that said more than two thirds of businesses in the Philippines plan to invest more in ASEAN.
Based on the survey of financial decision-makers in the region’s six biggest economies, about 61 percent are adding to their investments outside of ASEAN.
“Expansion into new ASEAN markets ranks as the top priority for businesses in the Philippines, ahead of improving customer experience,” said HSBC.
Some 85 percent expect intra-asean trade to increase in 2024, with 38 percent expecting an increase of greater than 30 percent, it added.
“The survey also found that macroeconomic uncertainty and the rapidly shifting regulatory and policy landscape are the top barriers for businesses in the Philippines looking to expand into new ASEAN markets, underlining the importance of advice and support from a banking partner,” said HSBC.
Concha added, “with Filipino firms targeting to expand outside the country, HSBC Philippines is best positioned to support our clients in such growth aspirations. HSBC’S international network will provide seamless connection to business opportunities within and beyond the ASEAN region.