HMC’s Record Earnings Highlight Risks in Scaling Global Infrastructure Assets
HMC Capital has reported a record half-year performance with pre-tax operating earnings soaring 240% to $202 million, driven by robust asset growth and strong returns across its diversified platforms.
- Pre-tax operating earnings up 240% to $202.2 million in 1H FY25
- Assets under management (AUM) increased 45% to $18.5 billion
- Private Equity division delivers 56.2% net return in 2024
- Successful $4.3 billion DigiCo Infrastructure REIT IPO launched
- Energy Transition platform boosted by $950 million Neoen Victoria portfolio acquisition
Record Earnings and Asset Growth
HMC Capital (ASX: HMC) has unveiled a landmark half-year financial performance for the period ending 31 December 2024, posting pre-tax operating earnings of $202.2 million, a staggering 240% increase compared to the prior corresponding period. This surge was underpinned by a 45% jump in assets under management (AUM), reaching $18.5 billion, reflecting the firm’s successful execution of large-scale transactions and strong investor appetite across its diversified investment platforms.
CEO David Di Pilla highlighted the company’s ability to capitalize on megatrends, noting that the growth was driven by significant contributions from its Private Equity, Digital Infrastructure, Energy Transition, and Private Credit divisions. The company’s strategic focus on sectors with robust demand has positioned it well for continued expansion.
Private Equity and Digital Infrastructure Lead the Charge
The Private Equity division delivered exceptional returns, with the HMCCP Fund I generating a 56.2% net return over calendar 2024 and an impressive 38.4% annualized return since inception, outperforming the S&P/ASX300 by 25.7% per annum. This performance underscores HMC’s operational expertise and ability to identify high-value opportunities.
Meanwhile, the successful establishment and IPO of the $4.3 billion DigiCo Infrastructure REIT marked a significant milestone, representing the largest Australian IPO transaction in over six years. This move has expanded HMC’s footprint into the global data centre sector, a rapidly growing and capital-intensive market with long-term growth potential.
Energy Transition and Real Estate Momentum
HMC’s Energy Transition platform gained momentum with the acquisition of Neoen’s Victorian renewable energy portfolio for $950 million on attractive deferred settlement terms. This acquisition is expected to seed a $2 billion-plus institutional fundraising initiative targeted for first close in the second half of FY25, reinforcing HMC’s commitment to sustainable infrastructure investments.
In real estate, the $1 billion Last Mile Logistics Fund I has been fully deployed, and the company is on track to establish three new daily needs funds, potentially attracting over $2.5 billion in new capital inflows. This signals growing investor confidence in HMC’s real estate strategies and operational capabilities.
Outlook and Dividend Guidance
Looking ahead, HMC reaffirmed its FY25 dividend guidance at 12 cents per share, supported by an annualised pre-tax operating EPS forecast of 80 cents. The company’s strategy to maintain dividends while reinvesting retained earnings into value-accretive growth opportunities reflects a balanced approach to shareholder returns and expansion.
With strong momentum across all five of its scalable platforms, HMC appears well-positioned to sustain its growth trajectory and capitalize on evolving market opportunities in the alternative asset management space.
Bottom Line?
HMC Capital’s record half-year performance sets a high bar, but sustaining this momentum will require deft navigation of market dynamics and execution risks.
Questions in the middle?
- How will HMC manage integration and growth risks associated with its expanding global digital infrastructure platform?
- What are the potential impacts of market volatility on the valuation and returns of HMC’s private equity and energy transition assets?
- Can HMC maintain its dividend payout while aggressively pursuing new capital deployment opportunities?
