Why David Di Pilla is the most watched investor in the market

HMC Capital managing director David Di Pilla. Picture: John Feder

The performance of David Di Pilla’s HMC Capital-managed funds is polarising the market, with some questioning whether his super fund backers may start to lose patience over the group’s performance.

The company of the former UBS banker has had challenges with its latest data centre listing linked to the tech stock sell-off, falling about 20 per cent in line with the overall market, and with one of its key tenants in its healthcare real estate trust unable to pay rents.

Close to $1bn of value has been wiped from the funds – HealthCo Healthcare and Wellness REIT and DigiCo REIT – since their initial public offerings in 2021 and 2024 respectively in a test of investor patience.

But Mr Di Pilla still has his supporters, saying HMC Capital has made investors a lot of money through his stake in Sigma that now is part of Chemist Warehouse, his listing of the Woolworths Masters hardware real estate assets and other deals carried out by his empire’s listed headstock.

Yet still, the market is closely watching whether listed entities in his portfolio with at least 30 per cent gearing come undone.

In December, Mr Di Pilla’s HMC purchased the Neoen renewable energy assets in Victoria for $950m to seed his energy transition platform that he hopes to increase to $19bn of assets under management.

The deal was funded from HMC’s balance sheet and the plan is to raise funds from institutional investors, including superannuation funds, to finance the deal.

Sources close to the group say that institutional investors are currently conducting due diligence, including super funds, and the market is watching closely to see whether they emerge as backers.

Super funds that have supported HMC’s investments so far have included Funds SA and Mercer, but retail investors have been called upon heavily for his other listed funds.

HealthCo, which listed at $2 a share in 2021 with a $650m market value, is down 55 per cent, with its shares now trading at 90.5c, giving it a market value of $504m.

In the time it has been listed, it has raised $320m in equity after gaining ownership of hospital ­assets for $703m – four hospitals it owned in full for $231m and half of an unlisted fund that had hospitals worth $944m at the time of the 2023 transaction.

However, a large part of HealthCo’s exposure is to embattled healthcare operator Healthscope, which has partly defaulted on rent payments to HealthCo, triggering the share price sell-off.

DigiCo REIT listed late last year at $5 a share after paying top dollar for data centres with its market value at $2.8bn, but the float has failed to gain traction in the market and its share price is now $3.89, giving it a $2.05bn market value, down 23 per cent.

Meanwhile shares in HMC Capital, which has been on an ambitious growth path to increase funds under management to $20bn, are trading off its 2024 high of about $12.35 at $7.35, giving it a market value of $3bn, a 40.5 per cent decrease, but the declines are in line with other alternative asset managers being sold off globally.

HMC has almost reached that target, accelerating from 2023 when it had $7.5bn of assets under management to $18.5bn at December 31.

HMC history

HMC floated as a business seeded with retail properties from Woolworths’ failed Masters Hardware venture in 2019 before it changed its name from Home Consortium to HMC Capital to reflect its expansion to become more of an investment firm that also includes a group that has made bets on stocks such as Lendlease, Sigma and Ingenia by acquiring stakes.

The IPO price was $3.35 and it had a $637.7m market value, but since that time it has embarked on acquisitions to be placed in its funds, including a $2.2bn buyout of bulky goods centre operator Aventus.

It has also tapped the market for at least $300m from investors.

Among other listed stocks launched is the Daily Needs REIT. It listed at $1.33 a share and a $642m market value, but now has a $1.16 share price and a $2.4bn market value after acquisitions.

However, Mr Di Pilla was understood to be instrumental in helping to broker a deal between Sigma and Chemist Warehouse, where the retail giant was listed through the back door into Sigma and is now trading with a $32bn value in a deal that sent Sigma’s shares soaring when announced.

Mr Di Pilla is related to Chemist Warehouse founder Mario Verrocchi.

Higher interest rates have weakened the performance of real estate stocks in the past two years.