HMC Capital’s Rapid Expansion Raises Execution Risks Despite Record Earnings

Record Half-Year Financial Performance

HMC Capital has delivered a standout first half for fiscal year 2025, posting a 204% surge in operating earnings per share (pre-tax) to 51.9 cents, alongside a 203% jump in revenue to $272.3 million. This performance underscores the firm’s successful diversification and scaling of its asset management platforms.

The company’s assets under management (AUM) climbed 45% to $18.5 billion as of December 2024, reflecting strong investor appetite and effective capital deployment across multiple verticals.

Driving Growth: Private Equity and Digital Infrastructure

Private equity remains a core growth engine, with the HMCCP Fund I delivering a remarkable 56.2% net return over calendar year 2024 and a 34.2% annualised return since inception. The fund’s outperformance relative to the S&P/ASX300 by 23.2% per annum has attracted increased co-investment and institutional interest.

Digital infrastructure has emerged as a transformative platform for HMC, highlighted by the successful establishment and IPO of the $4.3 billion DigiCo Infrastructure REIT (ASX: DGT). This REIT owns a diversified portfolio of hyperscale and co-location data centres across Australia and North America, with a development pipeline poised to significantly expand capacity and earnings.

Energy Transition: A National Champion in the Making

HMC’s Energy Transition platform marked a major milestone with the acquisition of Neoen’s Victorian renewable energy portfolio for $950 million on deferred settlement terms. This acquisition positions HMC as a top-10 player in Australia’s wind, solar, and battery storage sector, with an operational and development capacity exceeding 6GW.

The platform is on track for an inaugural $2 billion-plus fundraising round, targeting institutional cornerstone investors, signaling HMC’s ambition to become a national champion in supporting Australia’s decarbonisation goals.

Private Credit and Real Estate: Expanding Reach and Depth

Private credit AUM grew 14% post-acquisition, driven by commercial real estate lending and the onboarding of a Corporate & Asset-based Finance team. The platform maintains a disciplined credit approach with a strong focus on senior secured loans and low exposure to under-pressure sectors.

Meanwhile, the real estate platform continues to scale, with $9.8 billion in AUM and a $1.5 billion development pipeline. New unlisted funds targeting daily needs retail and urban retail sectors are expected to launch in the second half of FY25, supported by strong institutional interest.

Robust Balance Sheet and Capital Management

HMC’s balance sheet remains a key enabler for growth, with net tangible assets rising to $3.35 per share and gearing maintained at a conservative 6.5%. The company increased its debt facility limit to $675 million with extended maturity, providing ample liquidity to support ongoing capital deployment and fundraising activities.

Outlook and Market Positioning

Guided by a strategic focus on megatrends such as ageing populations, decarbonisation, digitalisation, and deglobalisation, HMC Capital is well positioned to sustain its growth trajectory. The company’s FY25 trading update projects an annualised pre-tax operating EPS of 80 cents, driven by momentum across all five core verticals.

With a consistent dividend policy targeting 12 cents per share and reinvestment into value-accretive opportunities, HMC is balancing shareholder returns with aggressive expansion plans.