How HMC Capital is progressing its private credit division
Six months on from HMC Capital’s acquisition of Payton Capital, Money Management takes a look at what the firm has achieved following the deal.
HMC Capital is an alternative asset manager that invests in high conviction and scalable real asset strategies. With over $19 billion of external assets under management (AUM) across real estate and private equity strategies, it has a focus on real estate, private equity, energy transition, value-add infrastructure, and private credit.
This month marks six months since HMC Capital acquired Payton Capital in a $144 million deal.
Founded in 1966 as an accountancy practice, Payton Capital rebranded in 2012 as a private real estate debt manager with $1.5 billion in AUM and 70 staff across Melbourne, Sydney and Brisbane.
Below, Money Management reviews both firms’ activities and announcements following the major deal.
May 2024
It was first announced in May last year that the alternative asset manager would be acquiring Payton Capital in a bid to establish a $5 billion private credit platform.
In an ASX presentation, HMC Capital said it was looking to establish a diversified private credit platform over the medium term covering real estate, corporate, mezzanine and infrastructure private credit investment management.
The strategic rationale of launching a private credit platform was that there’s a $350 billion addressable market opportunity in Australia over the next five years, more superannuation funds are allocating to the asset class, and the current environment of strong credit risk premia is a “golden period” for private credit.
In addition, HMC Capital appointed Matt Lancaster, a former senior managing director at Macquarie, as chair of the platform. Payton CEO, David Payton, will remain with the business for 12 months during transition until a replacement CEO is appointed.
July 2024
Two months later, it was confirmed that the deal had reached financial close and was on track to be integrated with HMC Capital “over the coming weeks”.
It forecast that Payton was well-positioned to organically grow beyond $2–3 billion over the medium term. The firm said it had received up to an aggregate $500 million credit approved financing terms from UBS AG, Australia branch, and Goldman Sachs for new fund financing facilities which HMC Capital hoped would accelerate its growth potential.
In a statement at the time, HMC Capital’s chair of private credit, Lancaster, said: “We are focused on building Australia’s leading private credit platform with a broad-based focus and capability. The private credit market in Australia is still at a very nascent stage of development with significant parallels to what I experienced in the United States over a decade ago.
“The Payton acquisition provides a strong growth platform in real estate credit, and we are now focused on expanding our capability to take advantage of the significant opportunity in corporate credit.”
November 2024
Payton Capital opened a new office in Perth, Western Australia, and a second office in Queensland on the Gold Coast to boost its AUM. The fund manager had existing offices located in Sydney and Brisbane, alongside its headquarters in Melbourne.
“Having a presence on the west coast and additional presence in south-east Queensland opens up significant opportunities for us to grow Payton’s assets under management in two dynamic markets. The new offices are a major step forward in a year of extensive growth,” said Craig Schloeffel, co-head of Payton Capital.
“We are confident that with building private credit market throughout the country and a strong team for both locations, we are well-positioned to continue expanding the business.”
Later at HMC Capital’s annual general meeting on 27 November, the firm said it was on track to achieve $20 billion in AUM in FY25 across its five divisions of real estate, private equity, private credit, energy transition and digital infrastructure.
As a result, it upped its target to the “much more ambitious growth” of 23 per cent per annum over five years and 42 per cent per annum over three years. This will help it achieve AUM of $50 billion over the next three to five years.
December 2024
Former BT sales executive, Sarah Hegarty, was appointed into the role of senior director of wholesale distribution at HMC Capital in December.
Hegarty joined from multiboutique firm Solomons Wealth Management where she was the director of business development.
In the HMC Capital role, she is responsible for driving growth and strengthening relationships with key stakeholders, initially focused on the HMC Capital Partners Fund 1. This is a $170 million Australian-domiciled unlisted fund offering exposure to a high conviction investment strategy invested in public and private companies.
Hegarty will also help HMC to grow its business with the intermediary and high-net-worth market, particularly in relation to the new private credit business.
AUTHOR
Jasmine Siljic
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