Lendlease unit ‘next on Di Pilla’s to-do list’ is Chemist Warehouse listing succeeds

Backing Chemist Warehouse into Sigma would require regulatory approval. Picture: Sarah Marshall

David Di Pilla is the mastermind behind the multibillion-dollar backdoor listing of Chemist Warehouse into Sigma Healthcare, and if he pulls it off, his next big deal could be wrestling the funds management arm from Australian real estate giant Lendlease.

Sources say Mr Di Pilla, who runs HMC Capital, is likely to have aspirations to control the Lendlease funds management arm, which some estimate accounts for about half of its $4.7bn market value, but this would need backing from major institutional investors and superannuation funds.

In the current environment, even well-established real estate investors like Charter Hall, Dexus Property and Centuria Capital are not finding it easy to raise capital from such players.

This makes it hard to believe HMC Capital, as a reasonably new player on the real estate scene, could gain their support.

Mr Di Pilla is a 19 per cent shareholder of Sigma and has board representation.

Backing Chemist Warehouse into Sigma is a tricky deal that will require regulatory approval, but it could make investors a lot of money.

Yet a successful transaction, aided by star equities operative and former banking colleague Robbie Vanderzeil, could convince powerful funds to invest with him.

Those who know Mr Di Pilla – a former UBS banker – well say they are “amazed” at what he has managed to pull off so far.

He was a seasoned deal-doer in his day, providing advice to predominantly infrastructure company clients.

HMC Capital’s David Di Pilla.

But it is not just his clever transaction skills that help him; he’s also very well connected.

Mr Di Pilla is the first cousin of Chemist Warehouse founder Mario Verrocchi and his wife is a member of one of Sydney’s richest families – the clan of Carlo Salteri, an Italian migrant engineer who co-founded Transfield Services in the 1950s.

While already running private investments such his aged care operator Aurrum, Mr Di Pilla burst onto the investment scene in a more public way in 2017, leading the purchase of 61 of Woolworths’ Masters hardware store sites and a further 21 development sites for the discount price of $725m.

Backing him were his former UBS boss Matthew Grounds, the founders of The Chemist Warehouse and the wealthy owners of retailer Spotlight.

In 2019 he raised $300m in an initial public offering of the Masters stores, valuing the new business – to be named Home Consortium – at $662.7m.

It’s since been renamed HMC Capital to reflect his private equity-style growth ambitions.

The properties were valued at $925m and the offering was ­snapped up by retail investors.

Backing that listing was the billionaire Besen retail family that secured its $2bn-plus fortune through investments such as apparel chain Sussan and Melbourne’s Highpoint Shopping Centre.

Mr Di Pilla also has strong links to billionaire retailer Brett Blundy after buying the bulky goods retail business he listed, Aventus, in a $2.2bn deal in 2021.

Aventus was then merged with his next listed vehicle, HomeCo Daily Needs REIT, which is has a $2.5bn market value and is managed by HMC.

The acquisition of Healthscope properties for $1.2bn was in some ways a surprise, in that he managed to negotiate higher rent increases than had earlier been locked in by arranging a funding deal for the private hospital ­operator.

Mr Di Pilla’s HMC Capital has been a holder of about 3 per cent of Lendlease shares, and like other investors – including Tanarra Capital, Allan Gray and Aware Super – is keen for an improvement in the group’s share price.

It is understood that Mr Di PIlla made his views known on the sale of the $1bn Lendlease Communities business to stave off a capital raising for the cash-strapped group.

Initially, Lendlease offered a half share in the business through a sale process, but Thailand’s Supalai was believed to be the only bidder.

Stockland, which was only interested in the company as a whole, then put forward an offer, but has been playing hard ball in the belief it is the only party in strong pursuit of the unit.

Some sources say a deal could be close.

But many believe that the most lucrative opportunity for Mr Di Pilla is the Lendlease funds management business.

The Lendlease funds management unit has some of the country’s most iconic shopping centres and buildings under control in funds such as the Australian Prime Property Fund Commercial, Australian Prime Property Fund Industrial and Australian Prime Property Fund Retail.

In total, there is $48bn in funds under management and it generated $82m of earnings before interest, tax, depreciation and amortisation, down 13 per cent.

Other assets Mr Di Pilla has considered for HMC Capital are GPT, worth $8bn, and healthcare assets owned by Canada’s NorthWest.

He has signalled by his commentary that he will explore global acquisitions as he moves to take his funds under management to $20bn in the medium term. But the Lendlease platform would be the jewel in the crown, and transformational.