HMC Capital to acquire non-bank CRE lender Payton Capital

CEO says the deal will extend product range, boost ability to compete

HMC Capital to acquire non-bank CRE lender Payton Capital

HMC Capital’s decision to acquire non-bank lender and commercial real estate private debt fund manager Payton Capital will strengthen its financial position and boost its competitiveness, says the CEO of Payton Capital.

David Payton welcomed the ASX announcement made on Friday by HMC Capital, ranked among the top 200 companies, that it would acquire 100% of Payton Capital.

HMC Capital is a leading alternative asset manager, specialising in real estate, private equity, digital infrastructure, and energy transition. It manages more than $13 billion in assets on behalf of institutional and high net worth investors.

Payton Capital, has about $1.5 billion in assets under management (AUM) specialises in real-estate secured debt in the mid-tier market across Australia’s east coast.

It works closely with commercial finance brokers, offering tailored property development loans, working capital and bridging finance, finance for construction, mezzanine solutions and preferred equity and joint venture finance.

It recently appointed former MaxCap COO Mark Heaven as Payton Capital’s new chief operating officer.

Acquisition will boost Payton Capital’s market power

David Payton (pictured above left) said the HMC Capital deal would significantly enhance Payton Capital’s market profile.

”It’s a reflection of the strong tailwinds and growth of private CRE debt in Australia, a sector which is expected to grow from circa $74 billion to $144 billion over the next five years,” said Payton.

He said  the transaction would also ensure Payton Capital continued to provide a “deep pipeline of investment offerings to wholesale and sophisticated investors, whilst also offering access to a broader range of lending products for borrowers”.

“I am excited about the possibilities that lie ahead for the Payton business,” said Payton.

“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.

“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.”

The HMC Capital transaction will see the company acquire Payton Capital for $127.5m, with the deal expected to be finalised in July 2024.

HMC Capital’s private credit strategy

In its ASX announcement, HMC Capital outlined its own plans for growth, including the establishment of a $5bn plus diversified private credit asset management platform over the medium term, covering real estate, corporate, mezzanine and infrastructure loans.

“We like the DNA that Payton has and together intend to build on that strong foundation to achieve great success in the future,” said HMC Capital CEO David Di Pilla (pictured above right).

Di Pilla said after more than 12 months of due diligence and planning, HMC Capital was excited to announce the setting up of the 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 $1.2 trillion credit market.”

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

“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 to address Australia's strong population growth and lack of affordable housing.”

HMC Capital also announced its appointment of former Macquarie Group senior managing director Matt Lancaster as the chairman of its new private credit platform.

In its overview of Payton Capital in the ASX announcement. HMC Capital said Payton Capital operated two unlisted funds which had grown significantly since inception.

“Payton’s funds management platform includes over 500 wholesale investors spanning independent financial advisors, HNW investors, small institutions, not-for-profit investors and major family offices in Australia,” the overview stated

Payton Capital had also recently obtained approvals from leading global investment banks to set up new financing facilities to provide up to $500m of extra investment capacity for its funds.

“HMC sees a major opportunity to accelerate Payton’s growth by establishing new fund products and securing larger institutional clients.”

HMC Capital acknowledged Payton Capital’s deep client base and “strong relationships with third party brokers”.

Greater support of Payton Foundation

Payton Capital also operates the Payton Foundation, which aims to transform the lives of poor and  vulnerable people through health, housing and education.

Di Pilla said as part of the acquisition, the foundation would enter a broader partnership with HMC Capital to enhance the participation from staff and clients and to increase its giving to the most vulnerable people.

“I am so proud that our decision to align with HMC Capital will enable us to solidify the legacy of the Payton Foundation.

“By joining forces with HMC Capital, we are ensuring the continued growth and longevity of the foundation's mission and impact to vulnerable people in Australia and overseas. A heartfelt thank you to everyone who has been part of this journey.”

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