Investors punish David Di Pilla’s HMC Capital but funds manager sticks by $50bn growth dream

Ambitious funds manager HMC Capital will temper its expansion to reflect the more volatile global environment, but is sticking to its target of growing its empire to more than $50bn.

HMC is pitching itself as an emerging alternative asset manager.

Embattled funds manager HMC Capital will temper its expansion to reflect the more volatile global environment, but is sticking to its target of growing its empire to more than $50bn.

Investors drove down shares in the ASX-listed investment manager by more than 6 per cent early on Thursday as it updated them on its strategy amid the sell-off in international markets prompted by the Trump administration’s tariffs. The stock recovered ground to close at $5.99, a 12c fall for the day.

Institutions are yet to be convinced that the David Di Pilla-led company can pull off its ambitions of expanding in fields ranging from data centres to shopping and last mile distribution complexes, energy infrastructure, as well as a play for hospital operator Healthscope.

Valuations of the company’s satellite funds, DigiCo Infrastructure REIT and Healthco Healthcare and Wellness, are sagging, with the data centre developer and operator almost at half its float price of $5, closing 15c lower on Thursday at $2.88.

Even so, HMC’s restructure of its flagship private equity fund, partly to position it for a tilt at Healthscope and unveiled earlier this week, demonstrated the strong returns its investment strategy is capable of.

The company is sticking to its long-term gambit of banking on mega-trends including the ageing population, the energy transition and the rise of artificial intelligence. That has encountered doubts about whether its high-fee managed funds model will succeed in a lower growth environment.

In a detailed presentation, the group defined its focus and plans to expand locally and offshore. HMC is pitching itself as an emerging alternative asset manager with five scalable verticals exposed to “high-conviction global mega-trends”.

HMC Capital managing director David Di Pilla. Picture: Jane Dempster

The company said that, while its ambition was to increase assets under management from $19bn today to more than $50bn over the medium term, risk management was a “key part of our ­culture”.

“The investment and geopolitical landscape has shifted – we have pivoted our strategies and risk settings to reflect the current operating environment,” the company said. It pointed to its $675m of committed and undrawn funding lines that gives it the financial firepower to chase distressed opportunities.

The company argued that data centres were caught up in a volatile narrative veering from ­“irrational exuberance to tales of woe”, and urged investors to ignore the noise. It insisted that underlying demand drivers were extremely strong and that shifts in how AI was used favoured proximity to internet exchanges and submarine cable landings, where it was focused.

Despite DigiCo’s plunge, HMC indicated that it would look to bring in capital partners to its existing operations and to boost growth in Australia and the US.

It is repositioning the Global Switch data centre in Sydney and said it was on track to get certification required to win major clients, seeking to dispel speculation it would face a review on its bank debt if this was not achieved.

The company also laid out its progress in launching multiple property funds, indicating that it would be developing large centres and eventually competing against the biggest players in the industry.

HMC said it was also on track to raise funds for its $950m purchase of Neoen’s Victorian assets with interest from superannuation funds. This week, its flagship private equity fund gen­erated a $300m dividend, $150m of which will be allocated to HMC Capital in its capacity as a shareholder.

That vehicle, HMC Capital Partners Fund I, will house part of Healthscope if HMC is successful in its tilt.

A strategy to exit key investments in HMC’s flagship fund by selling off stakes in listed groups Sigma Healthcare and Ingenia are largely behind the $300m windfall.

This will leave the fund cashed up to pursue other opportunities amid a broader shake-out of public and private valuations.

HMC will get its $150m in mid-April and will keep an ongoing investment valued at about $230m in the Fund I.

As part of the restructure of its private equity fund, HMC’s balance sheet is expected to next month have no debt and $675m of committed and undrawn funding lines to back fresh deals. The company said the return was consistent with its strategy to recycle capital and generate a strong return on equity.

It was also the best performing Australian equity fund in 2024 as ranked by Morningstar, delivering more than 55 per cent by way of returns.

“When you’re playing the long game and building a forever business, you just have to suck it up and keep pushing ahead,” Mr Di Pilla said this week.

Originally published as Investors punish David Di Pilla’s HMC Capital but funds manager sticks by $50bn growth dream