Further signs are emerging of pressure on HMC Capital, with it selling down its stake in GrainCorp after it became a major shareholder in the country’s largest grain handler last year.
A notice was released to the Australian Securities Exchange after the market closed on Wednesday, saying the David Di Pilla-led group was no longer a major holder of the stock.
Shares were sold at between $6.85 and $8 between February 13 and July 30.
The Australian reported in April last year that HMC had bought a 5 per cent stake, with a notice to the market revealing it bought in at between $7.27 and $8.60 between February and April last year.
It comes with speculation in the market surrounding the future of HMC Capital’s 21.9 per cent stake in its listed satellite, HomeCo Daily Needs REIT, worth $2.7bn, with questions over whether that stake could also be subject to a selldown.
A key jewel in GrainCorp’s crown, meanwhile, is the portfolio of valuable ports and terminals and many have considered the merits in the past of a spin off or sale of those assets.
The raid on the GrainCorp register was at a time when the grains handler suffered a share price plunge due to a profit warning in February.
HMC funds have also bought large stakes in struggling property investor Lendlease, retirement villages developer Ingenia and pharmaceutical company Sigma, which HMC sold down, capitalising on its rally from an $8.8bn merger with Chemist Warehouse.
At the time, it was said Mr Di Pilla and his investment team saw plenty of latent value in the GrainCorp business that was not yet fully reflected in its share price.
GrainCorp also has an opportunity to branch into renewable energy through biofuels.
GrainCorp’s share price in April last year was trading at between $6 and $7.50, and in the past month the share price has been between $7 and $8, closing on Thursday at $7.58.
Summer rainfall in Queensland and NSW has meant GrainCorp’s crops are likely to come in ahead of expectations.
It upgraded its earnings guidance in May, saying underlying net profit guidance for the 2025 financial year would be between $65m and $95m, and underlying earnings before interest, tax, depreciation and amortisation would be between $285m and $325m.
In February, it said it expected between $270m and $320m of EBITDA compared to $268m in the previous financial year, and between $60m and 95m of net profit.
The selldown comes as HMC Capital faces further pressure to secure funds as it remains due to settle the first payment on its renewable energy acquisition, the Victoria business of Neoen, early this month.
The settlement date was initially in July, but was pushed back by one month for the $950m acquisition late last year.
Sources suggest Lazard is now scouting the market for a buyer of the business.
HMC was to pay $750m in July and had sourced $200m of mezzanine debt for the payment in addition to $550m of funding lenders had agreed to underwrite at the time, and now needs to come up with the remaining $200m by December.
The plan for HMC Capital was to buy renewable energy assets like Neoen Victoria then raise funds from institutional investors which want exposure to the energy transition and spin the assets off into a fund.
But, this has been tough going for the group.
The group said the discussions with potential investors remained ongoing.
The news of the settlement extension at the time sent HMC Capital’s share price more than 17 per cent lower to $4.22, wiping about $400m from the market value.
Shares on Thursday closed at $3.59, with its market value at $1.51bn.
Mr Di Pilla founded HMC Capital with aspirations of more than doubling funds under management to $20bn from $7.5bn in 2023.
HMC Capital’s listed satellite, HealthCo Healthcare and Wellness REIT which listed in 2021 at $2 is down about 22 per cent this year to 79c after the collapse of Healthscope — the anchor tenant on the majority of the properties in the fund.
Healthscope receiver McGrathNicol is understood to have told bidders to expect a rent cut of up to 25 per cent on the operating sites.
HMC’s DigiCo REIT listed in December at $5 and closed on Thursday at $3.32.
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