HMC Capital, a wholly owned subsidiary of Home Consortium (ASX: HMC), has launched fundraising for a $500 million private equity fund to which it will commit $150 million.
HMC Capital Partners Fund I will be an unlisted wholesale fund which will target public and private companies in Australia and New Zealand. The fund will focus on companies holding real assets where there is potential to unlocked “trapped” value through improved capital allocation and portfolio management.
Annual returns of above 15% a year will be targeted along with a medium-term distribution yield of 2-4%. The fund will also provide quarterly windows to withdraw funds.
HMC Capital expects the new fund to attract high net-worth individual investors and wholesale investors including some who are already investors in its property trusts.
The management team will be led by HMC Capital managing director David Di Pilla, a former UBS investment banker, and other members of the team involved in the acquisition of the Masters real estate portfolio from Woolworths (ASX: WOW) in 2017. HMC Capital also plans to recruit additional investment professionals.
The fund is to be seeded by a 13.5% stake in Sigma Healthcare (ASX: SIG) already acquired by HMC.
Sigma operates a pharmacy wholesale business and retail chains Amcal, Discount Drug Stores, Guardian, PharmaSave and Wholelife Pharmacy & Healthfoods.
Sigma had been supplying Chemist Warehouse for years but in July 2018 lost that contract to a competitor, resulting in a loss of business volume which prompted a company restructure and the loss of hundreds of jobs. The share price fell to under $2 in January 2020 before gradually recovering to around $8 by the end of 2021.
This year, Sigma’s share price fell to $4 in June before recovering to close at $4.82 on 7 July.
HMC Capital currently manages two listed real estate investment trusts: HomeCo Daily Needs (ASX: HDN) and HealthCo Healthcare and Wellness (ASX: HCW). At 31 December, the two funds had external assets under management of $5.2 billion.
Di Pilla is chairman of parking technology company Duncan Solutions, an investee of Anacacia Private Equity.
Image: The HMC team took on the management of the real estate left behind when Woolworths closed its Masters home improvement stores.