HMC Capital (ASX:HMC) used its first-half FY2026 earnings call to emphasize the durability of its recurring earnings, the pace of fee-earning AUM growth, and what management described as a “liquidity and resilience” in the balance sheet, while also acknowledging a recent dislocation in the company’s share price.
Management said momentum was being driven by expanding fee-earning AUM and earnings streams from newer verticals including private credit, digital infrastructure, and Energy Transition. The company reported assets under management of AUD 19.5 billion at the end of the half, up AUD 600 million since June, and said it expects AUM to grow by over AUD 4 billion through active deployment opportunities.
First-half earnings and dividend
McMicking said management fee revenue increased 34%, driven by fee-earning AUM growth in real estate and private credit, along with a full six-month contribution from digital infrastructure. Transaction and performance revenue fell to AUD 4.2 million, which management attributed to the absence of larger transaction revenue recorded in the first half of FY2025.
The board declared an interim dividend of AUD 0.06 per share, partially franked. Management reiterated full-year dividend guidance of AUD 0.12 per share.
Balance sheet, liquidity, and KKR Energy Transition partnership
Management said it maintained a net liquidity position of AUD 1.6 billion. The company highlighted actions taken to strengthen flexibility, including extending its corporate debt facility by two years to November 2027. It also referenced expected cash proceeds tied to the recently announced Energy Transition transaction with KKR, including an expected release of AUD 155 million of cash proceeds at financial close, as well as refinancing in the Energy Transition platform.
In a Q&A exchange, management said the balance sheet investment in Energy Transition was AUD 305 million as at December and is expected to reduce to approximately AUD 180 million upon completion of the KKR transaction, with returned proceeds used to repay debt.
Management characterized the AUD 603 million investment by KKR as a “defining” milestone for the Energy Transition platform. The company said the transaction capitalizes the platform, pays down a mezzanine facility, and includes a further AUD 250 million of committed follow-on capital from KKR. Management said the partnership significantly reduces HMC’s balance sheet exposure and provides funding to unlock value from a 5.7 GW development portfolio.
Executives said value creation is expected as projects reach final investment decision (FID). The company said it has committed equity funding to develop the first AUD 800 million BESS project and expects it to reach FID this calendar year, forming part of 2.3 GW of projects it expects to reach FID in the next 12–18 months. In Q&A, management said KKR has committed to fund 90% of that AUD 800 million BESS project’s equity, with HMC committing 10%, and outlined an illustrative 60/40 debt-to-equity project funding mix.
Divisional performance and platform mix
On divisional earnings, McMicking reported the following operating earnings before tax for the half:
- Real estate: AUD 38.2 million, reflecting continued growth in fee-earning AUM and management fees
- Private equity: loss of AUD 3.1 million, driven primarily by lower and modest contribution from management fees
- Private credit: AUD 9.6 million, supported by 13% increase in fee-earning AUM and management fee growth
- Digital infrastructure: AUD 15.8 million, reflecting a full six-month contribution to funds management earnings, stable fee-earning AUM, and investment income
- Corporate: loss of AUD 18.9 million, reflecting central costs, platform investment, and net interest expenses associated with Energy Transition assets
Management said it now has more than AUD 15.9 billion of fee-earning AUM and expects the KKR Energy Transition partnership to add fee-earning AUM in the second half of FY2026. The company also said around 75% of AUM sits in open-ended structures, while unlisted institutional capital represents 35% of AUM, with an expectation that this proportion increases to 50% over time as deployment opportunities are executed.
Growth initiatives across verticals
Management outlined capital-light AUM growth initiatives across multiple verticals. In real estate, executives pointed to what they described as strong institutional demand for retail assets and said HARP had exchanged on AUD 200 million of acquisitions and was in due diligence on additional opportunities. The company said its Greenfield Fund, in partnership with Coles Group, has committed equity to support more than AUD 800 million of new acquisitions and greenfield developments over the next 12–24 months. It also said its Last Mile Logistics Fund is fully deployed with approximately AUD 1 billion of assets and more than AUD 150 million of developments underway.
In digital infrastructure, management said it is prioritizing execution of the approximately AUD 1 billion SYD1 expansion, citing strengthening demand from hyperscalers and enterprise customers and noting it was close to handover on a 20 MW upgrade program. The company also discussed efforts to address the NAV discount at DGT through capital recycling and accelerating the SYD1 expansion, arguing DGT’s share price did not reflect operational progress since IPO.
In private credit, management reported 13% AUM growth to AUD 2.2 billion and described a pipeline in excess of AUD 4 billion in commercial real estate loans. Executives said the current plan is to fund growth through its core fund—now AUD 550 million AUM and described as having doubled since inception—along with “wholesale and institutional” appetite, and potentially a AUD 1 billion offshore note offering under 128F. Management also said it is exploring an ASX-listed note structure and told analysts it was optimistic new mandates and structures could be in place before 30 June.
In private equity, the company said it remains focused on performance in the existing portfolio and disciplined deployment. Management reported HMCCP Fund 1 had recorded an annualized net return of 23.5% since inception and cited around AUD 140 million of dry powder.
Guidance and outlook
For FY2026, management said funds management EBITDA of AUD 85 million was tracking to guidance, supported by double-digit growth in real estate and private credit and an initial contribution from Energy Transition following the KKR partnership. The company said investment income is expected to be at least AUD 85 million, driven by distributions from co-investments and valuation gains in the Energy Transition platform, and reiterated a pre-tax operating EPS target of at least AUD 0.40 per share.
During Q&A, management said part of the investment income expectation reflects anticipated gains tied to progress and funding certainty in Energy Transition, while declining to provide exact details on the revaluation amount.
Executives closed by reiterating that, in their view, the share price does not reflect the “strength, visibility, and quality” of HMC’s recurring earnings base and the resilience of its financial position, while emphasizing continued operational momentum and a long-term growth trajectory.
About HMC Capital (ASX:HMC)
HMC Capital Limited, together with its subsidiaries, owns and manages real estate focused funds in Australia. It invests in high conviction and scalable real asset on behalf of individuals, large institutions, and super funds. The company was formerly known as Home Consortium Limited. HMC Capital Limited was incorporated in 2009 and is headquartered in Sydney, Australia.
