July 24, 2024
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HMC Capital has completed its acquisition of fund manager Payton Capital as it seeks to establish a $5 billion private credit platform.

In May, it was announced the alternative asset manager was looking to acquire Payton Capital in order to establish a diversified private credit platform over the medium term covering real estate, corporate, mezzanine, and infrastructure private credit investment management. 

The firm has confirmed that the acquisition of 100 per cent of Payton has now reached financial close and is on track to be integrated with HMC Capital “over the coming weeks”. 

It forecast Payton is well-positioned to organically grow beyond $2–3 billion over the medium term. The firm recently received up to an aggregate $500 million credit approved financing terms from UBS AG, Australia branch and Goldman Sachs for new fund financing facilities which HMC Capital hopes will accelerate its growth potential.

In a statement, HMC Capital’s chair of private credit, Matt Lancaster, said: “We are focused on building Australia’s leading private credit platform with a broad-based focus and capability. The private credit market in Australia is still at a very nascent stage of development with significant parallels to what I experienced in the United States over a decade ago. 

“The Payton acquisition provides a strong growth platform in real estate credit, and we are now focused on expanding our capability to take advantage of the significant opportunity in corporate credit.”

Following the acquisition’s completion, the firm is now recruiting an investment team focused on corporate lending and is in active discussions with banks to establish a warehouse facility for its corporate private credit investment strategies. 

The strategic rationale of launching a private credit platform is that there is a $350 billion addressable market opportunity in Australia over the next five years, more superannuation funds are allocating to the asset class, and the current environment of strong credit risk premia is a “golden period” for private credit.

Australian private credit is expected to grow from $188 billion in 2023 to $346 billion in 2028, the firm forecast.

Its proposed private credit platform will be divided between commercial real estate and corporate, and cover development finance, asset finance, corporate finance, private warehouse finance, alternative asset-based finance, and structured growth funding.

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