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HMC Capital acquires Payton Capital in private CRE debt market expansion

By Maja Garaca Djurdjevic
3 minute read

HMC Capital, a prominent ASX-listed alternative asset manager, has acquired Payton Capital, a leading commercial real estate (CRE) private debt fund manager.

HMC Capital, with over $13 billion in assets on behalf of institutional and high-net-worth investors, will be acquiring 100 per cent of the business for an upfront consideration of $127.5 million, the companies confirmed on Friday.

The acquisition signals a strategic alignment aimed at capitalising on the robust growth projected in Australia’s private CRE debt sector – a sector which is expected to grow from circa $74 billion to $144 billion over the next five years.

“I am excited about the possibilities that lie ahead for the Payton business. While our primary focus remains on delivering certainty and value for borrowers and investors, this development will enable us to extend our product range and to grow our influence in the Australian private credit market,” David Payton, Payton Capital CEO, said.

The integration with HMC Capital brings substantial advantages to Payton, the CEO explained, including access to a broader range of lending products and enhanced financial stability through HMC Capital’s institutional capital. Additionally, the transaction facilitates Payton’s goal of providing a deep pipeline of investment opportunities for wholesale and sophisticated investors.

“This acquisition not only strengthens our financial position and provides access to a strong balance sheet with associated institutional capital, but it will also empower us to compete in a maturing market and to deliver our future growth aspirations,” said Payton.

As for HMC Capital, it too has strong growth plans, and private credit is a key component of its corporate strategy.

“HMC Capital expects to build a $5 billion private credit platform over the medium term,” CEO of HMC Capital, David Di Pilla announced on Friday.

This platform, he clarified, will span real estate, corporate, mezzanine and infrastructure loans.

The first step in this plan is the acquisition of Payton. “We like the DNA that Payton has and together intend to build on that strong foundation to achieve great success in the future,” Di Pilla said.

In a separate statement issued by HMC, Di Pilla revealed the acquisition comes after a 12-month due diligence process.

“We see the growth opportunity in this sector as too big to ignore and private credit asset managers playing an increasingly larger role in Australia’s $1.2 trillion credit market,” Di Pilla noted.

“The acquisition of Payton provides HMC with an attractive entry into the private credit sector via a highly profitable and scalable platform.”

HMC Capital confirmed that to support the acquisition, it is undertaking a $100 million fully underwritten institutional placement and non-underwritten security purchase plan to raise up to approximately $30 million.

The firm has also realised $50 million from an on-market sell-down of its co-investment in the HomeCo Daily Needs REIT from 14 per cent to 12.1 per cent, it said.

Citing key highlights of the acquisition, HMC revealed Payton has a “scalable platform” with $1.5 billion of AUM, alongside $500 million of new credit approved fund financing lines from leading global investment banks.