HMC Capital, formerly Masters warehouse owner, on track to hit $10bn funds

The ex-Masters owner is forging into new areas as it grows.

Former Masters warehouse owner turned funds manager HMC Capital has flagged that it will chase merger and acquisition deals as it delivered an upbeat take on its progress towards running a $10bn empire.

The company has shifted from property owner to merger player and put together a successful deal to take over Brett Blundy’s Aventus Group before making an unsuccessful tilt for the Collimate Capital platform sold by AMP in April.

HMC shares jumped by 10.9 per cent to close at $5.21 as investors backed its expansion plans, which include two new funds.

“We are currently tracking six to 12 months ahead of our previously stated assets under management growth target of $10bn by the end of 2024, and we believe the current market environment is creating compelling and strategic opportunities which could accelerate our growth,” chief executive David Di Pilla said.

HMC Capital, which was backed by some of the country’s wealthiest families when it floated and is led by the former UBS banker, said it had a strong outlook as it had a more established and diversified platform.

It runs two listed REITs, which are looking to expand via development, and the two new property funds are aimed at capitalising on hot trends in the sector.

Mr Di Pilla said the group was also forging into private equity and other alternative assets. “Our strategy and ambition to create Australia’s leading ASX-listed diversified alternative asset manager is now well underway following a period of transformational growth in fiscal 2022,” he said.

The company’s Funds From Operations jumped by 143 per cent as the funds under its control lifted to $4.6bn, partly driven by the merger of its listed daily needs REIT with Aventus.

HMC unveiled the two new unlisted real estate fund strategies targeting daily needs and healthcare sectors. The first will be focused on creating last mile logistics assets as retailers switch to delivery and pick up models, while the health fund will focus on a major precinct in Sydney’s Camden.

Mr Di Pilla said the company strengthened the capital position of its funds through opportunistic sales which took advantage of the “disconnect between property and global capital markets”.

The fund manager benefited from the successful listing of its HealthCo Healthcare and Wellness REIT last September, and it is a pioneering listed vehicle in the area.

The healthcare trust is running ahead of forecasts and Mr Di Pilla said it was well capitalised for growth with no debt and significant liquidity to take advantage of attractive investment opportunities including its $500m development pipeline.

The company this month set up the HMC Capital Partners Fund I as its first unlisted product after successfully raising about $300m in “challenging” market conditions. It has a longer term target of getting to $1.5bn.

“HMC Capital Partners Fund I will target undervalued asset rich companies where we can influence positive change. The fund expands our platform into new alternative sectors including private equity and gives us greater flexibility to deploy capital during times of market volatility and dislocation,” Mr Di Pilla said.

It has already taken a stake in Sigma Healthcare which has risen on expectations of corporate activity.
The company cautioned that the unpredictable nature of its deals-making made it “challenging” to provide earnings guidance, but said it could repeat its initial success.