HMC Capital Energised transition

Research evidence excerpt

HMC Capital Energised transition

arly Forecasts (FYE Jun)

• KKR deal: In order to fund the purchase of the platform and provide capital FFO per share (A$)

to progress delivery of the pipeline, HMC entered into a deal with KKR to make 2025A 2026E 2027E

a $355m preferred equity investment in the platform and commit a further H1 0.36 0.07A 0.13

$248m in follow-on development capital. Under the terms of the deal, KKR is H2 0.17 0.23 0.20

FY 0.53 0.30 0.33

entitled to a preferred return of 14% (11% of which accrues as payment-in-

kind) and an equity participation of 20-35%. Due to the terms of the deal, we Style Exposure

believe it is critical that value is unlocked over the next three to five years and

that the outstanding KKR preferred equity investment is refinanced in a similar

timeframe. We consider three scenarios: (1) HMC finds a capital partner to buy

out KKR and repay the preferred equity investment, potentially generating a

healthy profit and future fund management earnings stream; (2) HMC exits

Energy Transition and sells the platform to a third party; and (3) HMC is unable

to realise appropriate value for the platform and holds out for a refinancing to

repay KKR’s preferred equity stake.

• Our earnings forecast changes and implied valuation: We reduce our

FY27 and FY28 pretax EPS forecasts by 18% and 27%, respectively, and J.P. Morgan Cazenove is acting as corporate broker and

sit marginally below the 40¢ guide, at 39¢ in FY27E. Current pricing values financialcash proposaladviser(theto “Proposal”)DCC plc in connectionfrom EnergywithCapitalan indicativePartners,

HMC at ~0.9x NTA, ~1.3x the mark-to-market NTA, and in line with our LLC and Kohlberg Kravis Roberts & Co. L.P. (together the

adjusted NTA (using our listed entity price target).