HMC Capital Partners Fund 1
Investing in high conviction strategic stakes where there is potential to unlock ‘trapped’ value through an active, private equity style investment approach
HMC Capital Partners Fund 1 (Fund), is an Australian-domiciled unlisted fund providing exposure to a high-conviction, private equity style investment strategy in listed equities. The Fund seeks to generate superior risk-adjusted returns (targeting +15%1 Net IRR per annum over 3-5 years) that are non-correlated to traditional equities and fixed income.
The Fund targets public companies where there is potential to unlocked 'trapped' value through improved capital allocation, operating and portfolio management. To 'unlock' value, the Fund takes a highly active approach to the companies it invests in and therefore only invests in situations where the Fund believes it will be able to influence outcomes to generate value. The Fund has a bias towards companies with significant real asset backing which provides downside protection and a theoretically asymmetrical return profile.
The Fund's seed investment in Sigma Healthcare is evidence of the success of the Fund's highly active investment approach. After acquiring a 19.07% stake in Sigma Healthcare, the Fund proactively engaged with management on the successful bid for a $3bn supply contract with Chemist Warehouse announced in June 2023. Subsequently in December 2023, Sigma Healthcare announced a proposed merger with Chemist Warehouse Group. The Sigma Healthcare share price materially re-rated since the announcement of the successful supply contract bid and the proposed merger, delivering strong returns for the Fund to date2.
The Fund’s investment team is led by the same management team, and use the same investment process and philosophy, that led the leveraged buyout and successful turnaround of the former Masters portfolio from Woolworths in 2017. This management team has managed the group since its ASX-listing in 2019 and has transformed HMC Capital into a leading ASX-listed alternative asset manager.
Investing in listed Australian and New Zealand entities with the opportunity to take a medium to long term strategic stake and influence change.
Research-led approach to identify undervalued ‘asset rich’ businesses trading below fundamental value due to:
- Conglomerate discount
- Cyclical factors
- Suboptimal capital allocation / strategic execution
The team will look to assist investee boards and management teams unlock ‘trapped’ value through improved capital allocation, operational performance and M&A.
Differentiated Approach to Generate Non-Correlated Returns
We intend to leverage our proven investment track record and unique skills to generate attractive risk adjusted returns which are non-correlated to equity markets over the long-term.
Screening Process
The Manager applies fundamental bottom-up research, screening, diligence and structuring with an aim of providing investors with actively managed exposure to a concentrated, high-conviction portfolio.
Detailed top-down and bottom-up analysis underpinned by HMC Capital’s broader ESG policy.
Opportunities in the listed strategy are sourced through both top-down and bottom-up filtering of listed entities, the team’s deep knowledge of Australian and New Zealand corporates and through its network of relationships with banks, consultants, co-investors and advisors. Each opportunity is assessed against the Manager’s target criteria appropriate for the relevant strategy, as set out below:
- potential to contribute to the target return while limiting downside risk;
- opportunity for operational improvement;
- identifiable factors suppressing market confidence and valuation;
- sub-optimal capital allocation;
- potential to demerge or sell non-core businesses/assets;
- opportunity to improve investor engagement and communication;
- opportunity to articulate clear strategy to restore investor confidence;
- shareholder register that presents opportunity for meaningful engagement; and
- sufficient liquidity to adjust holding position as required in respect of listed stakes.
The Manager follows a robust Investment Committee approval process with a key focus on ESG outcomes in addition to the above strategic criteria.
A unique offering in the Australian marketplace
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Important Information
HMC Capital Partners Fund I is comprised of HMC Capital Partners Trust A (“Trust A”), HMC Capital Partners Trust B (“Trust B”), and HMC Capital Partners Trust C (“Trust C”) (each a “Trust” and together the “Fund”). Each Trust has a trustee which is a subsidiary of HMC Capital Limited ABN 94 138 990 593 and a corporate authorised representative of HMC Capital Funds Management Pty Limited ACN 154 055 446, the holder of Australian Financial Services Licence number 513 625. The trustees are HMC Capital Partners No.1 Pty Ltd (ACN 658 946 117) as trustee of Trust A, HMC Capital Partners No.2 Pty Ltd (ACN 658 946 288) as trustee of Trust B, and HMC Capital Partners No.3 Pty Ltd (ACN 658 946 484) as trustee of Trust C. HMC Investment Management Pty Ltd ACN 644 510 583 manages the day- to-day investments of the Fund.
All information on this page is only intended to be accessed by the following persons: (i) ‘Sophisticated Investors’ or ‘Wholesale Clients’ as defined by the Corporations Act 2001 (Cth); or (ii) persons who are not prohibited to access this page or receive the information in their relevant jurisdiction under the applicable laws.
The information on this page is for general information purposes only and does not purport to be complete. It does not contain investment recommendations nor provide investment advice. IT does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. In preparing this information, no consideration has been made of any person’s investment objectives, financial situation and/or needs. Prospective investors should make their own enquiries and should seek all necessary financial, legal, tax and investment advice. We strongly encourage prospective investors to read the Information Memorandum in full before making any investment decision. The Information Memorandum is available to download from this page and at: https://www.hmccapital.com.au/our-funds/hmc-capital-partners-fund-i/
Past performance is not necessarily indicative of future results and no person guarantees the future performance of the Fund. The information on this page may also contain ‘forward-looking statements’. The words ‘forecast’, ‘estimate’, ‘likely’, ‘anticipate’, ‘believe’, ‘expect’, ‘opinion’, ‘outlook’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘target’, ‘plan’, ‘project’, ‘aim’, ‘will’, ‘seek’ and other similar expressions are intended to identify forward-looking statements. Forward-looking statements opinions and estimates provided on this page are based on assumptions and contingencies which are subject to change without notice and involve known and unknown risks, uncertainties and other factors. No guarantee, representation or warranty, express or implied, is made as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns, statements or tax treatment in relation to future matters contained on this page.
The Manager is a wholly-owned subsidiary of HMC Capital, an ASX-listed fund manager which invests in high-conviction and scalable real asset strategies.
HMC Capital was listed on the ASX in October 2019 and is the manager of the ASX-listed HomeCo Daily Needs REIT (ASX: HDN) and HealthCo Healthcare and Wellness REIT (ASX: HCW). Across these two vehicles, HMC Capital has externally managed assets of $8.5 billion. Since listing in October 2019, HMC Capital has achieved total shareholder return for investors of approximately 156% representing approximately 120% outperformance vs the S&P/ASX 200 Index and has increased assets under management by $7.6 billion representing a CAGR of >70%.
Management team
The HMC Capital platform comprises an experienced investment management team supported by more than 70 funds management professionals across key functions of asset management, finance, tax and risk management.
The Fund’s investment team is led by the same management team, and use the same investment process and philosophy, that led the leveraged buyout and successful turnaround of the former Masters portfolio from Woolworths in 2017. This management team has managed the group since its ASX-listing in 2019 and has transformed HMC Capital into a leading ASX-listed alternative asset manager.
The investment team has a proven track record of delivering outsized equity returns and executing large, complex transactions (refer Section 4 of the Information Memorandum).
The team is supported in its investment process by the Investment Committee as well as directors and advisors from the HMC Capital platform entities (Advisory Panel). The team has a uniquely broad range of capabilities derived from deep global experience across funds management, investment banking, corporate strategy, equity research, capital formation and corporate board membership.
David led the team that founded and established the consortium to acquire HomeCo (now HMC Capital) in 2016. David is the Founder, a director and the major shareholder of the Aurrum Aged Care group. From 2014 to 2016, David was also a strategic advisor and Director to operating subsidiaries of the Tenix Group of Companies.
David has over 20 years of experience in investment banking. From 2004 to 2015, David was Managing Director and Senior Adviser at UBS, Australia and during this time he advised some of Australia’s largest corporations on mergers and acquisitions, debt and equity capital market transactions.
Victoria joined HMC Capital in 2022 from UBS where she was a Managing Director and co-head of real estate investment banking.
Victoria has over 15 years of experience in investment banking with UBS. Victoria has broad sector experience across infrastructure, natural resources and real estate M&A. Victoria spent 3 years in New York with UBS as a senior M&A advisor working on a range of transactions.
Victoria holds a Bachelor of Commerce majoring in Finance and Chinese Studies qualification from University of New South Wales and a Master of Laws (Chinese Political Economy) from Renmin University in China.
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For further information, please contact us at invest@hmccapital.com.au.
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