HMC Capital is acquiring real estate credit manager Payton Capital for A$127.5 million (€78m) as a springboard to establishing a A$5-billion credit business over the medium term to finance real estate, mezzanine and infrastructure debt.
Melbourne-based Payton, which has A$1.5bn under management and currently operates two unlisted funds has been operating for more than 10 years.
The manager has secured A$500m of new credit approved for fund financing facilities from leading global investment banks that will help it grow,.
HMC managing director and CEO, David Di Pilla, said: “The acquisition of Payton provides HMC with an attractive entry into the private credit sector via a highly profitable and scalable platform.
“This will enable HMC to take advantage of attractive industry fundamentals and investor appetite for CRE private credit. Non-bank CRE is experiencing strong growth which is supported by the growing role of private credit asset managers in Australia and the significant need for new housing supply.”
Di Pilla said the company undertook due diligence and planning for more than a year before launching its private credit platform. “We see the growth opportunity in this sector as too big to ignore with private credit asset managers playing an increasingly larger role in Australia’s A$1.2trn credit market.”
Commercial real estate is also seen as “highly favourable” by the company as there is less competition from traditional capital sources such as big banks due to Basel II rules, along with structural demand for credit to address Australia’s chronic undersupply of residential housing stock.
He pointed out that in Australia domestic and offshore super, pension funds and insurance companies were allocating more capital to private credit in Australia and globally.
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