HSBC Holdings Plc (HSBA), Europe’s largest bank, is delaying the sale of its direct-investment unit until year-end as it considers options that may allow it to retain the 2 billion-pound ($3.4 billion) division, two people with knowledge of the matter said.
HSBC, which hired fund adviser Campbell Lutyens & Co. to solicit bids for Direct Principal Investments in February, is now looking for options besides selling the unit, including creating a separate subsidiary for the buyout arm, said the people, who asked not to be identified because the talks are private.
Under the Volcker rule, the part of the 2010 Dodd-Frank Act named after former Federal Reserve Chairman Paul Volcker, any bank that has operations in the U.S. is limited to owning no more than a 3 percent stake in hedge funds and private-equity funds. A number of banks including Credit Suisse Group AG and Bank of America Corp. have spun off their buyout units to comply with the legislation.
Direct Principal, which provides $25 million to $75 million in funding for leveraged buyouts and businesses seeking to grow or restructure, has held stakes in firms including U.K.-based oil-services company Viking Moorings Ltd. and Norwegian software-services provider Visma AS.
Spokesmen for London-based HSBC and Campbell Lutyens declined to comment.
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