Hmc Capital Limited · ASX:HMC
Hmc Capital — Investor Presentation (May 2024)
44 slides from Hmc Capital's investor presentation, May 24, 2024
Slide 1: Establishing Private Credit Platform & Equity Raising
NN Establishing Private Credit Platform & Equity Raising 24 May 2024
Slide 2: Agenda
HM Capita! Agenda Page7 Executive Summary Page 9 Establishment of Private Credit Platform Page 15 Acquisition: Payton Capital Overview Page 20 Equity Raising Page 24 Appendices
Slide 3: Journey Tracks to Sacred Sites
2 Journey Tracks to Sacred Sites Tony Sorby (2021) © the artist courtesy Kate Owen Gallery
Slide 4: Important Notices and Disclaimer
Important Notices and Disclaimer This investor presentation (Presentation) is dated 24 May 2024 and has been prepared by HMC Capital Limited ACN 138 990 593 (HMC). By attending an investor presentation or briefing, or accepting, accessing or reviewing this Presentation, you acknowledge and agree to
Slide 5: Important Notices and Disclaimer
Important Notices and Disclaimer Investment risk An investment in HMC shares is subject to known and unknown risks, some of which are beyond the control of HMC and its directors. HMC does not guarantee any particular rate of return or the performance of HMC nor does it guarantee any particular tax t
Slide 6: Important Notices and Disclaimer
Important Notices and Disclaimer Forward-looking statements are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Actual results, performance or achievements may differ materially from those expressed or implied in such statements and
Slide 7: Important Notices and Disclaimer
Important Notices and Disclaimer In connection with the Placement, one or more investors may elect to acquire an economic interest in the New Shares (Economic Interest), instead of subscribing for or acquiring the legal or beneficial interest in those shares. The Joint Lead Managers or its affiliate
Slide 8: Executive Summary
Executive Summary ▪ HMC Capital (ASX: HMC) announces the following initiatives to establish a $5bn+ diversified private credit platform over the medium-term spanning real estate, corporate, mezzanine and infrastructure private credit investment management: Establishing Private ‒ Acquisition of Payto
Slide 9: Growing & Diversified Alternative Asset Manager
Growing & Diversified Alternative Asset Manager On-track to grow AUM beyond $20bn and achieve 20% ROE target FUM TODAY MEDIUM-TERM ▪ Multiple high quality and scalable real estate strategies backed by structural and demographic megatrends 1 Real Estate $9.5bn1 ▪ Targeting 20% p.a. organic growth and
Slide 10: Establishment of Private Credit Platform
HM Capital ESTABLISHMENT OF PRIVATE CREDIT PLATFORM
Slide 11: Strategic Rationale
Strategic Rationale Compelling opportunity and timing for HMC to enter the Australian private credit sector ✓ Current environment of high risk-free rates plus strong credit risk premia creating so called “golden period” for private credit Why Private Credit? ✓ Addressable market opportunity expected
Slide 12: Private Credit Landscape
Private Credit Landscape Payton acquisition represents first step in build-out of diversified private credit platform Balance Sheet Lenders Private Credit Asset Managers Domestic Corporate / Offshore Special Large Domestic & Non-bank CRE Debt Offshore Credit Asset Backed Asset Situation Fund Offshor
Slide 13: Private Credit Growth Strategy
Private Credit Growth Strategy Immediate opportunity to grow Payton and establish broader private credit platform Establishing $5bn+ AUM Private Credit platform HMC Capital Credit Strategy – Target Sectors The acquisition of Payton provides an attractive entry into the credit 1▪ Scale Payton platfor
Slide 14: Why Private Credit?
Why Private Credit? Sector tailwinds creating ‘golden period’ for private credit globally and now in Australia… Attractive risk adjusted returns1 Largest source of AUM growth for leading managers (US$bn)2 Current environment of high risk-free rates plus strong credit risk premia creating Since 2018
Slide 15: Why CRE Private Credit?
Why CRE Private Credit? CRE is specialist subsector underpinned by compelling demand & supply fundamentals in Australia Australian CRE credit market Traditional lenders are losing Australia’s housing shortage underpins is growing rapidly ($bn)1 market share to non-bank lenders2 significant CRE credi
Slide 16: Payton Capital Overview
PAYTON CAPITAL OVERVIEW HM Capital 15
Slide 17: Overview of Payton
Overview of Payton Leading CRE credit platform with proven investment track record and diversified capital base Platform Overview Platform Highlights ▪ Established specialist Australian commercial real estate private credit asset manager with $1.5bn1 of AUM, positioning Payton as a leading participa
Slide 18: Payton Business Model
Payton Business Model High margin and high ROE business supported by attractive funds management revenue model Payton Select Investment Payton Pooled Investment Fund financing Fund (PSIF) Fund (PPIF) (Two leading global Diverse Capital investment banks) Sources Ability to customise Open-ended pooled
Slide 19: Payton Borrower and Loan Profile
Payton Borrower and Loan Profile Payton currently manages $1.5bn of AUM1 with large exposure to the structurally undersupplied residential sector across Australia’s eastern seaboard AUM by loan size1 AUM risk allocation1,2 Examples of investments by Payton Land subdivision 8% 5% 10% 22% Payton’s str
Slide 20: Highly Experienced Team
Highly Experienced Team Extensive experience in property investment, development, funds management and lending Matt Lancaster David Payton Chair of HMC Capital Private Credit Platform Payton CEO ▪ Over 25 years’ experience in finance and investment based in the United ▪ David has led Payton for over
Slide 21: Equity Raising
EQUITY RAISING HM Capital 20
Slide 22: Offer terms
Offer terms ▪ HMC is undertaking a $100m fully underwritten institutional placement (Placement) and a non-underwritten security purchase plan to raise up to $30m (SPP)1 (collectively the Offer) Offer structure ▪ Issue of approximately 15.4 million New Shares under the Placement, representing 4.4% of
Slide 23: Sources & Uses
Sources & Uses Sources of funds $m Equity Raising – Institutional Placement 100.0 Equity Raising – Share Purchase Plan1 30.0 Sale of HDN units 50.0 HMC scrip consideration 28.5 Total sources of funds 208.5 Uses of funds $m Acquisition of Payton – cash upfront consideration2,3 99.0 Acquisition of Pay
Slide 24: Indicative timetable
Indicative timetable Event Date Record date to determine eligibility to participate in the SPP Thursday, 23 May 2024 Trading halt and announcement of Placement Friday, 24 May 2024 Shares recommence trading on ASX (trading halt lifted and announce completion of Placement) Monday, 27 May 2024 Settleme
Slide 25: Appendix A: Additional Information
APPENDIX A: ADDITIONAL INFORMATION HM Capital 24
Slide 26: Fund Overview: Payton Select Investment Fund (PSIF)
Fund Overview: Payton Select Investment Fund (PSIF) PSIF offers investors exposure to individual loans across 5 investment options PSIF Overview ▪ PSIF was launched in April 2018 as Payton’s first wholesale CRE debt fund targeting active, self-directed wholesale investors seeking customised investme
Slide 27: Fund Overview: Payton Pooled Investment Fund (PPIF)
Fund Overview: Payton Pooled Investment Fund (PPIF) PPIF offers investors exposure to a diversified portfolio of loans across 3 investment options PPIF Overview ▪ PPIF was launched in March 2021 as a Payton managed open-ended investment fund targeting wholesale investors who prefer passive exposure
Slide 28: Payton Credit Process & Risk Management
Payton Credit Process & Risk Management Payton has institutional grade credit and risk management processes overseen by an experienced and highly credentialed Investment Committee CREDIT PROCESS PORTFOLIO RISK MANAGEMENT Institutional grade due diligence is undertaken on every credit application, Pa
Slide 29: Matt Lancaster | Chair of HMC Private Credit Platform
Matt Lancaster | Chair of HMC Private Credit Platform Matt Lancaster has 25 years of experience in finance and investment in the United States, Australia and internationally Professional Experience ▪ Until 2020 Mr Lancaster was a Senior Managing Director of Macquarie Group Limited (ASX:MQG) where he
Slide 30: Appendix B: Key Risks
APPENDIX B: KEY RISKS HM Capital 29
Slide 31: Key Risks
Key Risks This section discusses some of the key risks associated with an investment in HMC shares. A number of risks and uncertainties may adversely affect the operating and financial performance or position of HMC and, in turn, affect the value of HMC shares. These include specific risks associate
Slide 32: Key Risks
Key Risks 1.5 General economic conditions The financial performance of HMC and its managed funds may fluctuate due to various factors, including movements in the Australian and international capital markets, interest rates, exchange rates, inflation, Australian and international economic conditions,
Slide 33: Key Risks
Key Risks 1.11 Reputational risk and stakeholder trust HMC’s reputation and brand and its products and services are important to HMC’s standing in the market. HMC’s failure to protect its reputation could have a material adverse effect on its business, including its brand and profitability. HMC’s br
Slide 34: Key Risks
Key Risks 1.16 Occupational, health and safety risk The HMC Group is committed to providing a healthy and safe environment for its personnel, contractors and visitors. However, there is a risk that an incident could lead to a fatality or serious harm to an employee, a contractor, a third-party emplo
Slide 35: Key Risks
Key Risks 2. Risks in relation to the Acquisition 2.1 Reliance on information provided by the vendors HMC undertook a due diligence process in respect of the Acquisition, which relied in part on the review of financial (including unaudited and other financial information), operational and other info
Slide 36: Key Risks
Key Risks 2.4 The financial capacity of, and recourse to, the vendors and the warranty and indemnity insurer may be limited Warranty and indemnity insurance has been purchased for HMC for the Acquisition. If the Acquisition completes, and if a warranty or other claim is made under the sale agreement
Slide 37: Key Risks
Key Risks 2.7 Historical liability HMC may become directly or indirectly liable for liabilities incurred by Payton Capital, or is liable for, in the past, which are contingent or of an uncertain amount, were not identified during HMC’s due diligence or which are greater than expected, or for which t
Slide 38: Appendix C: Summary of Equity Underwriting Arrangements
HM Capital APPENDIX C: SUMMARY OF EQUITY UNDERWRITING ARRANGEMENTS 37
Slide 39: Summary of Equity Underwriting Arrangements
Summary of Equity Underwriting Arrangements Goldman Sachs Australia Pty Ltd and UBS Securities Australia Limited (Joint Lead Managers) are acting as joint lead managers, underwriters and bookrunners of the Placement. HMC has entered into an underwriting agreement with the Joint Lead Managers in resp
Slide 40: Summary of Equity Underwriting Arrangements
Summary of Equity Underwriting Arrangements • (i) there is an application to any Government Agency (including, without limitation, any court and the Takeovers Panel but excluding ASIC) for any order, declaration (including, in relation to the Takeovers Panel, of unacceptable circumstances) or other
Slide 41: Appendix D: International Offer Restrictions
HM Capital APPENDIX D: INTERNATIONAL OFFER RESTRICTIONS 40
Slide 42: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Austral
Slide 43: Further Information
Further Information Investors and analysts Media Misha Mohl Will McMicking John Frey Group Head of Strategy, Research & Group Chief Financial Officer Corporate communications Investor Relations +61 422 371 575 +61 451 634 991 +61 411 361 361 misha.mohl@hmccapital.com.au william.mcmicking@hmccapital.
Slide 44: HM Capital
HM Capital