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HMC Capital launches real-asset-focused alternative strategy

Taking strategy stakes and extracting value key to returns amid volatility

High-conviction alternatives manager, HMC Capital (ASX:HMC), has announced the launch of its new HMC Capital Partners Fund 1, which will seek to invest in private and public businesses with real-asset backing. The fund uses a high-conviction and scalable real asset strategy to target public and private companies that have real assets attached to them, and where the opportunity exists to unlock trapped value.

The fund is targeting a return of 15 per cent a year with a projected annual yield of 2-4 per cent, both net of fees. Its mandate is to buy strategic stakes in listed companies with some ability to extend into the private market.

While the investment landscape has been a challenging one for 2022, alternative assets have proven to be a useful diversification tool against rising inflation.

  • HMC Capital CEO and managing director, David Di Pilla, said: “Our prediction that 2022 would present a challenging investment environment has been realised in recent months. Economies and markets are moving into a new phase which is highly uncertain. While a natural instinct in this environment is to allocate to cash or do nothing, we believe that attractive opportunities are now emerging and that a portfolio allocation to the fund will allow investors to benefit from exposure to these opportunities.”

    HMC has significantly outperformed both the S&P/ASX 200 Index and the S&P/ASX  200 A-REIT Index since listing in October 2019 and has successfully transitioned to a capital-light funds management model with enhanced earnings leverage and growth potential.

    The fund currently has a substantial holding in Sigma Healthcare (ASX: SIG), of which a 13.5% holding was acquired as a seed asset for the fund. An article in the Australian Financial Review said, “HMC Capital is expected to sit on its stake, talk to management and see whether it can use its well-established retail sector network to try to add value to the group.”

    The fund is targeting a $500 million first close; HMC Capital will commit $150 million to the fund via one or more fund vehicles.

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