HMC Capital Limited (HMC, the Group, ASX: HMC) is a diversified, large-scale alternative asset manager focused on digital infrastructure, the energy transition, real estate, private credit and private equity. The Group applies its balance sheet to execute high ROE opportunities aimed at growing Assets Under Management through asset warehousing, underwriting, and M & A activity.

$50 billion 3-5 year Assets Under Management target

HMC has recently announced that it is now targeting the ambitious growth target of increasing Assets Under Management (AUM) to $50 billion over the next 3 to 5 years. This fresh target is on the back of the Group’s expectation to achieve its previously stated $20 billion medium-term AUM target in the current financial year. AUM are currently $17.5 billion.

The $50 billion AUM target assumes that each of the five existing platforms can be scaled to at least $10 billion each over the next 3 to 5 years. This target appears soundly based in that each of the 5 platforms are exposed to high growth megatrends in sectors with deep and broad investment opportunities.

To give this $50 billion target some context, it implies a 23 percent per annum AUM growth rate over 5 years and 42 percent over 3 years. This growth is materially below HMC’s five-year AUM growth history.

Australia’s leading diversified, large scale alternative asset manager

HMC’s five high growth investment platforms are diversified across Real Estate, Private Equity, Private Credit, Energy Transition and Digital Infrastructure.

The $10 billion Real Estate platform generates inflation-protected cash flows from high-quality non-cyclical tenants and currently has a $1.6 billion development pipeline. Management is confident the Real Estate platform can grow beyond $12 billion of committed AUM in FY25.

HMC’s $1 billion Private Equity platform, HMC Capital Partners 1, was established in August 2022 and invests in ASX-listed companies. Since inception this fund has delivered an annualised return of 38 percent. Putting his return into perspective, a dollar invested in the fund at inception is now worth $2.08. The largest contributor to the fund’s performance since inception has been the investment in Sigma Healthcare which delivered an Internal Rate of Return of 100 percent during the investment holding period. This followed the announced merger with Chemist Warehouse Group. The Private Equity is platform has deployed into six other high conviction portfolio companies where HMC has identified material value creation strategies.

The Private Credit platform was launched in July 2024 and is focused on mid-market commercial real estate lending activities. The goal is to build Australia’s leading diversified Private Credit platform with the FY25 objective to double AUM to over $3 billion.

The Energy Transition platform was established in February 2024 and with its first seed investment secured is on track to reach at least $2 billion in AUM in FY25. The first seed asset is StorEnergy, a specialist developer, owner, and operator of utility scale Battery Energy Storage Systems. The platform’s second investment opportunity is in advanced due diligence. HMC’s Energy Transition Advisory Board is chaired by The Honourable Julia Gillard.

HMC’s ASX-listed Digital Infrastructure Real Estate Investment Trust platform is highly strategic and growing rapidly. The platform is an owner, operator and developer of a portfolio of 13 data centres in Australia and North America. The platform is currently conducting a $2.75 billion IPO and on completion will have AUM of approximately $4.3 billion. The IPO completion and ASX listing date is 12 December 2024.

FY25 Trading Update

HMC’s year-to-date earnings performance is currently tracking at 70 cents per share annualised. This is 52 percent above the trading update provided in October 2024 and 89 percent higher than HMC’s record FY24 result.

The material step-up in earnings is attributable to this month’s establishment of the Digital Infrastructure Real Estate Investment Trust platform and the continued out-performance of HMC Capital Partners Fund 1, the Group’s Private Equity platform.

FY25 dividend guidance is 12 cents per share and is line with the Group’s stated strategy to maintain the dividend at this level, and re-invest retained earnings into value accretive opportunities.

HMC is targeting approximately two thirds of its earnings base generated from recurring sources. This deliberate focus on dependable earnings supported by high margin and high growth platforms should sustain consistent earnings growth in the decade ahead.