Blackstone buys HSBC's A$30B Australian loan book in private credit push

Blackstone Inc.'s private credit arm is acquiring roughly A$26 billion to A$30 billion ($17 billion to $20 billion) of HSBC Holdings Plc's Australian mortgage and credit card loans, marking one of the largest transfers of a traditional bank's consumer loan book to the private credit market.

"Banks are increasingly finding that holding prime mortgage portfolios on their balance sheets doesn't justify the capital allocation under current regulatory requirements," said Hannah Park, a credit analyst. "Private credit funds can earn returns on these assets that look attractive inside their fund structures even when they'd be marginal for a regulated bank."

The portfolio consists primarily of performing prime mortgages and credit card receivables from HSBC's Australian retail operations. HSBC had originally explored selling the entire business to National Australia Bank Ltd. or Macquarie Group Ltd., but after those talks collapsed, the assets drew interest from KKR & Co., Apollo Global Management Inc. and Cerberus Capital Management, according to Australian media reports. Citi is advising HSBC on the transaction while Morgan Stanley is working for Blackstone.

The deal signals that private credit, which has already reshaped middle-market corporate lending, is now penetrating consumer lending at scale. For HSBC, the sale frees up capital tied to a low-margin loan book while allowing it to retain deposit relationships in Australia. For Blackstone, it provides an immediate A$26 billion-plus entry into the Australian mortgage market — a sector dominated by the country's four largest banks.

The acquisition comes as Blackstone's overall business continues to generate strong earnings despite investor concerns about its flagship private credit fund, BCRED. The firm reported second-quarter distributable earnings of nearly $2 billion, up 26% from a year earlier, driven by 22% growth in fee-related earnings and a 27% increase in net realizations. Total inflows approached $70 billion during the quarter, pushing assets under management to $1.35 trillion.

Blackstone's credit and insurance platform led fundraising with $31 billion in inflows, growing its AUM 15% to $469.3 billion. While BCRED saw redemption requests rise to 10% of fund value in the second quarter — above the firm's 5% quarterly withdrawal cap — the fund still raised $1 billion of new equity during the period.

Private Credit's Expanding Reach

The HSBC transaction represents a structural shift in how consumer lending assets change hands. Banks globally face rising regulatory compliance costs and capital requirements that make holding large loan portfolios increasingly expensive, particularly for products like prime mortgages where margins are thin. Private credit funds, operating outside banking regulatory constraints, face no such capital adequacy limits and can earn steady returns on performing consumer loans.

For Blackstone, the deal also diversifies its private credit exposure beyond corporate lending into residential mortgages, which carry different risk characteristics tied to housing market cycles and interest rate movements rather than corporate earnings. The portfolio's concentration in Australian prime mortgages — a market where the major banks have historically dominated — adds geographic specificity to that risk profile.

AI Investments Drive Broader Growth

While the HSBC acquisition marks Blackstone's expansion in private credit, the firm's broader earnings story this year has been driven by artificial intelligence-related investments. Nine of Blackstone's 10 best-appreciating assets in the second quarter had an AI link, including data center investments and a majority stake in power infrastructure company Sabre Industries. The firm recently formed a joint venture with Google to offer data center capacity and computing services, and it plans to double the size of its data center platform over the next two years.

"We are in the early days of what I believe will be the most consequential transformation of industry and markets in a generation," Chief Executive Officer Steve Schwarzman said on the earnings call. "Our stock is on sale today."

This article is for informational purposes only and does not constitute investment advice.