Key Takeaways
- • HMC Capital is acquiring Payton Capital to establish a $5 billion private credit platform covering real estate, corporate, mezzanine, and infrastructure debt investments.
- • The Australian private credit market represents a $350 billion addressable opportunity over the next five years, with market growth projected from $188 billion in 2023 to $346 billion by 2028.
- • HMC Capital is raising approximately $130 million through a $100 million fully underwritten institutional placement and a $30 million non-underwritten security purchase plan to fund the Payton acquisition, expected to settle in July 2024.
- • Matt Lancaster, a former senior managing director at Macquarie, has been appointed chair of the new platform; Payton CEO David Payton will remain for 12 months during the transition.
- • The move positions HMC Capital to double its assets under management from $10 billion to $20 billion in the medium term, capitalizing on elevated credit risk premiums and increased superannuation fund allocations to private credit.
Summary
HMC Capital, an ASX-listed alternative asset manager, has announced the acquisition of Payton Capital as the cornerstone of its new $5 billion private credit platform. The platform will diversify across real estate, corporate, mezzanine, and infrastructure private credit investment management—positioning HMC to capture substantial growth in Australia's private credit sector during what the firm characterizes as a "golden period" for credit markets.
Payton Capital, founded in 1966 as an accountancy practice and rebranded in 2012 as a private real estate debt manager, currently manages $1.5 billion in assets under management with 70 staff across Melbourne, Sydney, and Brisbane. Following a 12-month screening process, the acquisition is expected to settle in July 2024. David Payton will remain as CEO for 12 months to facilitate the transition, after which a replacement will be appointed. Matt Lancaster, a former senior managing director at Macquarie, has been named chair of the new platform, bringing significant institutional capital markets expertise to the venture.
The strategic rationale centers on Australia's expanding private credit market, which is forecast to grow from $188 billion in 2023 to $346 billion by 2028—representing a $350 billion addressable opportunity over the next five years. HMC Capital identified increasing superannuation fund allocations to alternative credit and strong credit risk premiums as primary drivers of this expansion. The acquisition positions Payton alongside established competitors including Qualitas, Metrics Credit Partners, and Apollo in the private real estate debt management sector.
To fund the acquisition, HMC Capital is raising approximately $130 million through a fully underwritten $100 million institutional placement and a $30 million non-underwritten security purchase plan. The capital raise demonstrates institutional confidence in the platform's market positioning. HMC Capital currently manages $10 billion in assets under management and has signaled ambitions to double this to $20 billion in the medium term, with the private credit platform serving as a core growth vehicle for this expansion.
Payton Capital, founded in 1966 as an accountancy practice and rebranded in 2012 as a private real estate debt manager, currently manages $1.5 billion in assets under management with 70 staff across Melbourne, Sydney, and Brisbane. Following a 12-month screening process, the acquisition is expected to settle in July 2024. David Payton will remain as CEO for 12 months to facilitate the transition, after which a replacement will be appointed. Matt Lancaster, a former senior managing director at Macquarie, has been named chair of the new platform, bringing significant institutional capital markets expertise to the venture.
The strategic rationale centers on Australia's expanding private credit market, which is forecast to grow from $188 billion in 2023 to $346 billion by 2028—representing a $350 billion addressable opportunity over the next five years. HMC Capital identified increasing superannuation fund allocations to alternative credit and strong credit risk premiums as primary drivers of this expansion. The acquisition positions Payton alongside established competitors including Qualitas, Metrics Credit Partners, and Apollo in the private real estate debt management sector.
To fund the acquisition, HMC Capital is raising approximately $130 million through a fully underwritten $100 million institutional placement and a $30 million non-underwritten security purchase plan. The capital raise demonstrates institutional confidence in the platform's market positioning. HMC Capital currently manages $10 billion in assets under management and has signaled ambitions to double this to $20 billion in the medium term, with the private credit platform serving as a core growth vehicle for this expansion.
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