Sydney-based HMC Capital plans to convert an open-ended healthcare real estate fund into a closed-ended wholesale fund, pending unitholders’ approval, following a windfall distribution from two investments.
The HMC Capital Partners Fund I (HMCCP Fund I), launched in 2022, has declared an interim distribution this financial year totalling around A$300m (€173m), reflecting the gains from its investments in Sigma Healthcare and Ingenia Communities, a listed lifestyle community real estate investment trust.
In a letter to unitholders, HMC Capital said a review to consider the optimal strategy of the fund had concluded that it would be best to change the fund to a closed-ended fund.
HMC Capital will commit A$150m from its share of distribution from HMCCP Fund I into the proposed new fund to be called HMC Capital Partners Fund II and it will also retain an ongoing investment valued at around A$230m.
Capital raising will start in coming weeks and existing unitholders will be able to transfer into the new fund.
The new fund will target “a concentrated portfolio of our highest-conviction opportunities rather than seeking to diversify into eight to 10 positions” and its mandate would be expanded to invest in unlisted assets, materially increasing its investment universe and ability to arbitrage public and private markets, according to HMC Capital.
HMC Capital has various unlisted investments under review for the new fund, including participation in the potential opportunity to acquire and recapitalise Healthscope, Australia’s second-largest private hospital owner and operator.
Post-distribution, the current HMCCP Fund I will have a cash balance of more than A$100m to fund future investment opportunities.
HMC managing director and CEO David Di Pilla said: “HMC Capital Partners Fund I has proven our ability to deliver outsized and uncorrelated returns for investors by applying a private-equity mindset to investing in listed equities.
“We believe the proposed changes and relaunch of the strategy as Fund II would provide a greater opportunity to capitalise on these skills, and to deliver and exceed targeted returns for Fund II investors.”
Subject to approval of fund I unitholders, the proposed changes to strategy and fund terms are intended to come into effect from 1 July 2025.
To read the latest IPE Real Assets magazine click here.
