HMC opened its Australian office in 2009 and committed US$40 million to its investment strategy, hiring former ANZ head of private equity Jeremy Steele as vice president and senior managing director.
The company has two funds and typically invests in smaller, fast growing businesses, from which it expects yields in the mid to high teens.
“We typically write equity checks of $5 to $15 million in businesses that would have an enterprise value of $10 to $50 million dollars,” Mr Steele said at a lunch in Sydney yesterday.
“I would characterise us as a growth fund, which means we are investing in fast-growing businesses that are growing 10 to 15 per cent per annum. One of the interesting parts of what we do is discover businesses you never knew existed - because every big business starts off as a small business,” he said.
“Generally, we are the first capital injection for these companies, so we are bringing in real change. We go in and know that there may only be one or two people with management expertise and so we roll up our sleeves and get involved in the business.”
HMC is currently fundraising for one of its two Australian funds, ‘HAPE II’, which made its first investment early last year with a minority stake in Techdrill Civil & Mining Services.
Last November, HAPE II acquired a majority stake in Cardioscan, Australia’s largest outsourced cardiovascular and respiratory monitoring service provider, which supplies cardiac testing and monitoring services to large pathology and private hospital networks in Australia.
“We really like that space,” Mr Steele said. “Healthcare for Australia is only going to get a bigger spotlight on it and so I think the investment in healthcare is critical.”
HMC also has its eye on the industrial services space, where Mr Steele sees value in economies of scale.
“By taking a cost out of a business and then providing that service across a number of different businesses you can get economies of scale, and every business is looking for ways to take cost out. If you can take it out and do it cheaper than they can do it internally, then there is good money to be made,” he said.
Mr Steele estimates there are 80,000 Australian businesses in the fund’s target market.
