The managers of HSBC Capital (Canada)'s private equity group have completed their buyout, spinning the division out from under the bank's ownership and putting it in their hands.
Led by Dave Mullen, Neil Johansen and John Philp, the business will now be known as Fulcrum Capital Parnters. For the past 18 years, this division had been a part of HSBC, offering $1-billion in private equity and mezzanine lending to 120 companies.
Though HSBC has been shedding non-core assets worldwide, the spinout is more closely related to the growing trend of North American banks selling off their private equity practices. South of the border, Dodd-Frank's new Volcker Rule prevents any banking entity from sponsoring or investing in a hedge fund or private equity fund. (More on the specifics of these rules here.)
In Canada, similar spinouts have included TD Capital transforming into Birch Hill, and National Bank selling off EdgeStone (which was later bought by GMP).
While you rarely hear about the remaining merchant banking and private equity arms of Canadian banks, some still exist, including Scotia's merchant banking group, and BMO's mezzanine lending arm.
Under the HSBC brand, Fulcrum last raised $180-million during a 2010 fundraising round. The firm now manages $750-million in capital.
Tim Kiladze