HMC Capital's Discount To Its Own Assets Starts To Close

Fund managers weigh a new $1bn-plus private credit mandate against lingering contagion from HMC's listed REIT vehicles

2 Jul 2026 · 7 min read

Seneca Financial Solutions used its July 2026 commentary to make a case that HMC Capital, the diversified alternative asset manager, stands to benefit indirectly from a recovery in one of its own listed vehicles. The manager said that if HealthCo Healthcare and Wellness REIT re-rates as expected, attention will turn to HMC Capital itself as the biggest beneficiary of that shift in asset quality, since HMC externally manages the REIT and has waived 50 per cent of its base management fees as part of a package of measures announced following the Healthscope receivership and the suspension of HCW distributions. The manager said HMC sentiment has been in the trash following the poor performance of underlying vehicles including HCW and DigiCo, but noted the company had just won a private credit mandate worth more than $1 billion, proof it can still grow fee-earning assets under management from institutional allocators.

That mandate win follows a broader stabilisation in the underlying portfolio through May 2026. Seneca Financial Solutions reported the stock rallied 23 per cent during the month as investors gained confidence in DigiCo, HMC's data centre REIT, after it sold its US data centre asset at a 5 per cent premium to book value to focus on its higher-returning Australian assets. Wilson Asset Management, presenting at the same period's Macquarie Equities Conference, said management reaffirmed FY26 guidance and confirmed the CHI1 Chicago divestment, reinforcing its view that the company's balance sheet continues to support accretive growth across digital infrastructure, private credit and real estate.

HMC just won a >$1b private credit mandate, proving they can still grow fee-earning AUM from institutional asset allocators.

— Seneca Financial Solutions, Article, July 2026

A discount to NTA that several managers called overdone

The path to that recovery ran through one of the sharpest valuation dislocations any manager here has described. Seneca Financial Solutions said in February 2026 that despite HMC reporting assets under management up 4 per cent to $19.5 billion and recurring management fees up 34 per cent to $84.5 million, the stock traded at a roughly 25 per cent discount to its underlying net tangible asset value of $3.21, effectively ascribing no value to a funds management business the market had valued at around $2 billion, or $4.85 a share, only 18 months earlier.

HMC remains a text-book example of the kind of dislocation from fundamentals we aim to exploit for our investors.

— Seneca Financial Solutions, Monthly Report, February 2026

Investors Mutual Limited took a similar view the same month, calling the roughly 33.8 per cent monthly decline overblown, attributing it to investor frustration with the pace of progress toward long-term growth targets and contagion from weaker offshore alternative asset manager share prices, while maintaining conviction the company's longer-term prospects remained strong. Asymmetric Asset Management initiated a new position in March 2026 near the share price low, saying the central attraction was significant downside protection embedded in the balance sheet, given HMC's substantial portfolio of listed REITs trading at a discount to net tangible asset backing effectively underwrote much of the stock's own pricing, on top of a well-established $19.5 billion funds management business generating around $120 million in recurring fee revenue.

From a DigiCo-fuelled slide to a contrarian buy signal

The de-rating traces back to late 2024, when the stock peaked above $12.50 following successful deals including the Sigma Healthcare and Chemist Warehouse transaction, before the DigiCo Infrastructure REIT it had brought to market at a lofty valuation began trading well below its issue price. Ellerston Capital tracked the slide closely through 2025, noting the stock hit a 64-month low of $2.90 in mid-November before rallying 33 per cent in the following two weeks, a move it said followed a major sell-side analyst downgrade that nonetheless concluded the stock was too cheap even under a downside scenario. Renaissance Asset Management described diving back into the stock around Christmas, after it had plummeted 70 per cent to below $3, calling the veteran dealmaker Jean-Pierre Di Pilla's efforts to resolve HMC's problems a great contrarian opportunity, while acknowledging the company was not yet out of the woods.

Not everyone stayed the course

Oracle Advisory Group exited entirely in September 2025, citing challenges the company had disclosed in raising capital for its energy portfolio, and arguing that management's target of growing assets under management to $50 billion within three to five years, from $18 billion at the time, looked increasingly doubtful given the fundraising difficulty. Antares Capital similarly exited that month, saying it had allowed a small leeway following the company's results to see progress on stalled processes around the healthcare REIT and the disposal of its renewable energy business, neither of which had eventuated.

What managers are watching next

With the private credit mandate win now in hand and HCW's fee waiver in place to support a recovery in that REIT, the questions managers are focused on are whether the underlying vehicles, HCW and DigiCo in particular, can sustain the stabilisation seen through the first half of 2026, and whether the market's discount to net tangible assets continues to close as fee-earning AUM growth resumes.