Good morning and thank you for joining today's call. Before we commence, HMC Capital would like to acknowledge the traditional custodians of country throughout Australia and celebrate their diverse culture and connections to land, sea, and community. We pay our respects to their elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander people today. With me on the call this morning are Group CFO Will McMicking, Gerard Dover, Head of Energy Transition, and Craig Schloeffel, Head of our Private Credit Platform. I'll start the presentation on slide five for an overview of our 2025 results. Financial year 2025 was highlighted by exceptional deal generation and value creation for the HMC Group, which included ASX listing of DigiCo Infrastructure REIT, establishing a global platform that will provide exposure to the fast-growing digital and AI opportunity.
In private equity, the landmark Sigma–Chemist Warehouse merger underpinned an outstanding performance for our HMCCP Fund I, and in December, we announced the acquisition of the renewable energy portfolio Neoen in Victoria on highly attractive terms, a key seed asset for our energy transition platform. As a result of this activity, we were able to deliver record AUM and operating earnings growth during the period. The key financial highlights in Financial Year 2025 included: funds under management grew 47% in the year to $18.7 billion. Funds management revenue of $234.2 million was primarily from recurring management fees, which translated into funds management EBITDA of $102.6 million for the year. Finally, pre-tax operating earnings of $0.56 per share were up over 51% from Financial Year 2024, as we continued the trajectory in operating earnings growth since our IPO in 2019.
I'd like to highlight that HMC made a prudent decision to write down the value of our investment in DigiCo REIT, consistent with our other REITs versus the $5 IPO price we previously held the investment at. Absent this, our pre-tax operating earnings per share would have been in line with the $0.66 per share number we updated the market with back at the Macquarie conference in May. Our business today is well capitalized with nil drawn debt and balance sheet liquidity increasing at calendar year end to over $2 billion. It's important to acknowledge that despite Financial Year 2025 being a period of unprecedented growth in AUM and operating earnings, our share price has fallen sharply. The share price performance of HCW and DGT REITs have been disappointing, and our management teams are working hard to deliver improved operational outcomes for these entities.
We're confident that over time this will translate into earnings growth and share price strength. The Financial Year 2025 reporting for our three listed entities: HDN, HCW, and DGT have now completed over the last week. Importantly, the HDN result last week demonstrated a strong and compelling outlook for the future, and we're sure that over time and over the next few years, DGT and HCW will also enjoy similarly bright and exciting futures. As we move into Financial Year 2026, our optimism and confidence in our outlook remain strong for the following reasons. Our five business verticals are exposed to high-growth megatrends, which underpin their fundamental long-term demand drivers. The ongoing deployment opportunities across our platform remain strong and remain compelling on a three to five-year horizon. Importantly, our recurring earnings base is solid, underpinned by funds management and investment income.
Our recurring operating EPS base, as we move into Financial Year 2026, is now $0.40 per share, which we'll provide more details around later in this morning's presentation. Finally, on page nine, we'll detail our major focused areas for Financial Year 2026, areas where we will continue to operationalize the HMC platform for sustainable future growth. Remember that three of our platforms, which are organically developed, are less than one year old, and we're confident that with operational focus and intensity, they will grow and flourish. Our ambition to grow AUM to $50 billion and beyond and recognize this journey may not be linear, it remains intact, however. Financial Year 2025 may be a year where we deliver operational wins and lay the platform for sustainable future growth. I now turn to slide six, the economic flywheel.
The flywheel today is much broader and deeper than it was when we first revealed it over two years ago. HMC today has multiple growth drivers and a more diversified business. As our balance sheet expands, so does our ability to proactively use it to accelerate our AUM growth. Examples in 2025 where we utilized our balance sheet included: the establishment of digital infrastructure vertical, where HMC used the balance sheet to assemble and underwrite the seed portfolio of assets ahead of the IPO. Another example included the $950 million acquisition of Neoen in Victorian renewable portfolio. Importantly, the ability to provide the vendor with execution certainty enabled us to secure such an attractive valuation opportunity. The scalability and success of our business model is demonstrated on the right-hand side of this slide.
Since our IPO in 2019, HMC has grown AUM by 73% per annum, whilst consistently growing operating EPS, improving the quality of our recurring income while maintaining a strong balance sheet with high levels of liquidity. We remain confident in driving our performance towards our stated 20% return on equity target. I'll move to slide seven of the presentation to discuss HMC' s key capital deployment opportunities. Looking ahead, we see a clear pathway to grow AUM beyond $50 billion in the medium term. In real estate, HMC currently manages approximately $10 billion across retail, last mile logistics, and essential healthcare assets. We anticipate AUM growing forward will be largely driven by unlisted institutional capital. For example, our recently established HARP & HUG funds have embedded AUM growth of up to $2 billion over the next two years.
We continue to develop new, innovative, unlisted institutional fund strategies, which are resonating with capital partners as we enter a more favorable interest rate environment. In Financial Year 2025, we grew our real estate unlisted institutional AUM by 17%, and with deployment opportunities available, expect to maintain this level of growth trajectory for the medium term. In private equity, our HMCCP Fund I has built a three-year track record of top quartile returns, which is critical in attracting new wholesale capital. Importantly for this vertical, we're focused on maintaining market-leading performance and continuing to generate high return on equity through ongoing performance fees rather than absolute AUM growth. In digital infrastructure, which is a high-velocity growth story, following the IPO of DigiCo , we have a $5 billion platform with a clear opportunity to double AUM through expansion projects like SID1 and LAX1.
Our assets in Australia and the U.S. are strategic and high quality and will be open to capital and wholesale partnerships over the next 12 months once we deliver operational wins in development and leasing. In private credit, AUM has grown beyond $2 billion since Financial Year end, which represents 25% growth since the acquisition of Payton Capital in July 2024. Our loan pipeline is healthy, and we recently wrote a $300 million loan, the largest in the business's history, which will flow into AUM in the first half of Financial Year 2026. Our core fund is growing strongly, with AUM almost doubling to just under $500 million over the last 12 months. The core fund is being positioned as an institutional-grade product with the focus to grow wholesale and institutional mandates over the next few years.
Finally, energy transition, a sector we recently entered, is set to become a major contributor to AUM growth. Our $1 billion Neoen Victorian portfolio acquisition represents a large-scale and high-quality portfolio where we are currently raising institutional capital. Gerard Dover will provide more information on our progress shortly. As you can see from this slide, across every platform, the opportunity set is significant. We have the balance sheet strength, the growing investor relationships, and the management depth to deliver our ambitions. I'd now like to move to slide eight to discuss how HMC is operationalizing each of our business verticals. Financial Year 2025 was not just about delivering record results, it was about setting the foundations for the next phase of the HMC Capital growth story. During the year, we invested substantial capital into three new verticals across private credit, digital, and energy transition.
We believe we have taken calculated risks to introduce these verticals at points in time that presented to acquire seed or foundation assets and businesses at attractive entry points. Financial Year 2026 will now be about proving that we can operationalize these new verticals and continue to continuously improve our business model to achieve long-term sustainable growth. We've been deliberate in strengthening our leadership across every vertical, ensuring we have the right operational expertise to execute our strategy at scale. We remain rigorous in ensuring that operational delivery and excellence are important to the HMC Group. In real estate, we have appointed a new CFO, Phillip Dooley, former Head of Finance at Woolworths Real Estate Division, who brings deep operational and capital allocation experience. Philip will become a senior business partner to Sid Sharma and help leverage and scale our platform.
Across healthcare, our focus is primarily around the ongoing operations of our 11 freehold hospitals. Our team has worked tirelessly over the last 12 months to manage this situation and ensure that we preserve long-term value for our investors. As reported at the HCW result last Friday, we are now advanced on long-form conditional lease agreements with over 11 hospitals, with the 11 hospitals with alternative operators. In private equity, we have over the first half of this year reviewed and analyzed this part of our business carefully. The success of our strategy to date has been driven by a small number of focused opportunities where we've been able to roll up our sleeves and really impact change at our portfolio companies. Examples have included Sigma, Ingenia, and more recently, Baby Bunting.
Following a restructure of the HMCCP Fund I earlier this year, we've narrowed our focus for the fund to pursue a smaller number of higher conviction opportunities. This HMCCP Fund I investment strategy works and really plays to the strength and capabilities of the HMC Group. We are currently in market recruiting additional and experienced private equity executives to be able to further enhance and amplify this strategy. In private credit, over the last 12 months, we have embedded new credit and risk frameworks and bolstered governance as we scale. This includes onboarding senior risk leaders from major banks and enhancing our in-house valuation and project monitoring capability. These steps ensure we can deploy more capital into larger-scale loan opportunities while maintaining credit quality of the book.
In digital infrastructure, since the establishment of this vertical, we've been encouraged by the significant growth in our new business leasing pipeline, which on an unweighted basis is now [3x to 4x] greater for the Australian business than we assumed in our acquisition case. Key changes made to bolster and focus the business have included: Chris Maher has also assumed the role of CEO DigiCo REIT. Damon Reid has moved to COO of Australian Operations. We've had the appointment of new Heads of Sales, Commercial, and Major Projects across the Australian business, reflecting the scale of the opportunities in the immediate 12 - 24 months. The SID1 expansion project is now underway and will deliver 9 MW of liquid cooled capacity in Financial Year 2026, a capability very few operators in the Australian market can offer.
We also welcomed the recent HCF Strategic Status awarded by the Department of Home Affairs for SID1, which was an important milestone in bringing this asset back into the mainstream for major digital deployments. In energy transition, we've integrated the newly acquired Neoen Victorian portfolio into our existing Stor-Energy platform. We now have a 20-person executive team in place, led by Gerard Dover, positioning us to capture opportunities across the full renewable energy and storage value chain. Now moving to slide nine, where I'll discuss our business model, which continues to create value for our shareholders. At the core of our model is a disciplined approach to capital management. We target nil permanent core debt to ensure maximum financial flexibility with over $675 million of corporate debt facilities, which we also use to underwrite new investments and seed HMC-managed funds.
Our low payout ratio allows us to reinvest excess cash flow into existing investments and new strategies, supporting compounding growth. From an earnings perspective, we have multiple value drivers: recurring funds management EBITDA and valuation growth in our investments. Across both, we target returns on average of 10% per annum, underpinned by scalable strategies in digital infrastructure, energy transition, real estate, private equity, and private credit, all of which are aligned to long-term megatrends. You'll note that at the bottom of slide seven, we've endeavored to summarize how we are thinking about our five key business verticals today. Real estate, private equity, and private credit are now consistently delivering strong recurring earnings for the HMC Group from funds management and investment income. In Financial Year 2025, private equity exceeded its 20% return on invested capital target.
Private credit is tracking in the mid-teens and expected to trend to 20% return on invested capital as we grow AUM. Real estate will get there through continued growth in AUM from unlisted institutional funds and some modest capital recycling. Digital infrastructure, we're primarily focused on operational delivery across our Australian platform and LAX1. Once this is delivered, return on invested capital will lift as we introduce new capital partnerships. Let's remember that digital has been part of the HMC Group now for just over six months. In energy transition, we'll today provide a detailed update on the business and our progress on fundraising, which will be a key milestone to delivering our return on invested capital targets. I'd now like to move to the funds management section of today's presentation. On slide 11, we provide an update on our real estate platform.
Real estate is HMC 's largest business today, with approximately $10 billion in AUM across listed and unlisted funds. Since December 2020, HMC has been able to grow real estate AUM at a 51% compound annual growth rate, despite navigating through one of the most challenging interest rate hiking cycles in history. Financial Year 2025, real estate generated approximately $80 million of high-quality recurring funds management revenues. Divisional return on invested capital has improved materially over the past 12 months, which we expect to continue trending towards our 20% target over the medium term. The operational performance across our real estate platform has remained strong. This reflects the structural growth in our target sectors and high-performing operational teams. We deployed the remainder of dry powder of our $1.25 billion last mile logistics fund in Financial Year 2025.
The fund now holds a high-quality portfolio of daily needs and last mile logistics assets, with $140 million of embedded development opportunities to enhance income and capital values over the medium term. We also launched two new unlisted daily needs retail funds: the HMC Unlisted Grocery Fund, HUG, and the HMC Australian Retail Partnership, HARP, with more than $1 billion in combined seed equity commitments from major domestic institutions. The HUG fund focuses on non-discretionary supermarket-anchored assets in metropolitan growth corridors, while HARP targets high-quality convenience retail and development potential. Importantly, with both of these funds, there is over $2 billion of embedded AUM growth as dry powder is deployed into investment opportunities over the next two years. We continue to progress on capital raising for the $1 billion-1.5 billion HMC Capital Unlisted Urban Retail Fund, HURF, which we spoke about in February.
We now expect this fund to be launched in the first half of Financial Year 2026 and a strategy requiring large-scale subregional and regional assets. We look forward to updating you on this strategy in the coming months. Looking ahead, we're significantly more optimistic about the growth outlook for our real estate business as we move forward in a more favorable interest rate cycle. Moving now to slide 12 to discuss our private equity vertical. Private equity continues to be one of HMC 's standout performers, highlighting our ability to deliver uncorrelated high-conviction returns. In Financial Year 2025, HMCCP Fund I delivered a net return of 43.6%, which translated into a $25 million performance fee for the HMC Group. Since its inception, the fund has returned nearly 30% per annum net of fees, materially outperforming the ASX 300 by more than 18% per year.
These returns are the product of our active ownership model. We take influential stakes in listed companies, work closely with management teams and boards, and drive strategic change that unlocks shareholder value, from optimizing capital allocation to executing transformative portfolio restructures. This approach has been validated externally, with HMCCP Fund I ranked number one by Morningstar as the top-performing Australian equities fund in calendar year 2024. We see significant upside remaining in the current portfolio of five positions, and we continue to focus our time and capital where the potential for value creation is highest. Following the exit from seed investment Sigma, which generated an unlevered IRR for the fund in excess of 100%, HMCCP Fund I paid a $300 million dividend in April 2025 for investors who supported the fund at inception, which represents a dividend of 80% of their initial investment in less than three years.
Looking ahead, we will continue to focus on situations where our active ownership model can unlock significant value while selectively pursuing co-investment opportunities to broaden the platform's scale and earnings contribution. HMCCP is off to a solid start in Financial Year 2026, with the August month to date performance strong, and we remain confident in our ability to achieve our 15% target for the year. In addition, HMCCP is currently sitting on approximately 25% cash, which positions the fund well to deploy into compelling new opportunities in Financial Year 2026, which are currently under evaluation. I'll now move to slide 13 to talk about digital infrastructure. Our focus for this vertical in Financial Year 2026 is to make sure we operationally deliver against our business plan objectives for DigiCo REIT. We need to deliver four things. One, HCF award.
We were pleased to announce in the last 10 days that Sydney One Data Center was formally certified by the Department of Home Affairs as a certified strategic hosting provider of data services. Certified strategic status is the highest level of assurance under the Australian Government Hosting Certification Framework. This was an important milestone in unlocking the value in the SID1 asset and further validates HMC 's conviction in the DGT investment story. Two, expansion and upgrade. The SID1 expansion, delivering 9 MW of liquid cooled IT capacity in Financial Year 2026, is one of only a handful of projects in Australia capable of meeting the unique power, density, and cooling requirements of future AI workloads. Three, leasing momentum. Leasing velocity has accelerated following HCF certification at SID1, and we're seeing strong interest from hyperscale cloud, enterprise, and government customers. Four, capital partnerships.
Beyond Australia, we're exploring capital partnerships to expand our footprint in the U.S., a market where we already have a high-quality presence through StratCap. This platform has all the hallmarks of a future $10 billion AUM business for HMC , and we're investing accordingly to capture the future opportunity. We need to stay focused on execution, and with patience, this vertical will deliver. Moving now to slide 14, where I'll pass over to Craig Schloeffel to discuss private credit.
Thanks, David. Our private credit platform, now branded HMC Private Credit, is rapidly emerging as one of Australia's leading non-bank lenders. In FY 2025, AUM grew to date now by circa 25%, driven by strong inflows into our flagship core fund, which has now doubled in size since we acquired Payton .
We've also expanded our lending pipeline to approximately $3 billion, reflecting growing borrower demand for flexible, relationship-driven funding solutions that the banks are increasingly unable to provide. We've made substantial investments in origination capability, opening new offices in key states and hiring senior lenders with deep sector and regional relationships. At the same time, we've bolstered governance with the appointment of a new Head of Credit and Risk, the integration of experienced former valuers and quantity surveyors into our assessment process, and the establishment of market-leading transparency and reporting standards. Under the guidance of Matt Lancaster, Chair of the HMC Private Credit Platform, we've seen uplift across our risk and compliance provisioning, valuation policy, and procedures to ensure we're meeting institutional-grade expectations. We've implemented active provisioning within the CRE pooled funds as a prudent measure to institutionalize the fund offering.
We are now well positioned to grow this platform as investor appetite for Australian private credit remains strong, including the recent additions to the corporate and asset finance business, who are quickly building out a pipeline of opportunities. Over the medium term, we see the potential to scale this platform several times over, while maintaining disciplined credit quality and risk-adjusted returns. I'll now turn to slide 15. This snapshot of the platform, I'd like to highlight the strong growth in AUM over time, which is reflective of both the growing private credit market in Australia, but also the investor interest in our key offering of middle-market residential commercial real estate debt. The central graph highlights the stable nature of the returns of our flagship first mortgage fund, the HMC Capital Private Credit Core Fund.
This stable return profile is also more broadly reflective of the stable nature of the first mortgage offering that much of our business represents, reflecting the steady returns delivered in the middle-market residential CRE private credit market over time. As David mentioned, this core fund has doubled in FUM since acquisition of the Payton business by HMC Capital, driven largely by the attractive, stable returns paired with the diversity of the full spectrum of residential assets, diversity of location, borrower, and geography. We expect this growth to continue as we further expand capital raising into the wholesale platforms domestically and institutional investors both offshore and locally. The undersupply of residential housing nationally underpins the opportunity for origination as the market looks to meet the demand.
With offices in five locations across four key states, we feel we are well positioned to capitalize on the opportunity and deliver attractive risk-adjusted returns well into the future. I now pass to Gerard Dover to discuss energy transition on slide 16.
Thanks, Craig. Moving to slide 16 on the energy transition platform. In just 18 months since launching, the energy transition platform has grown into a $1 billion operating portfolio with a 5.5 GW development pipeline, one of the largest renewable portfolios of its kind in Australia. The acquisition of Neoen in its Victorian portfolio is transformational. Four operational renewable generation assets totaling 652 MW establish HMC in the top 10 in the Australian national energy market. The FY 2025 EBITDA was $64 million.
These earnings are underpinned with 85% contracted capacity, and this strong operating cash flow supported the non-recourse senior and mezzanine facilities, which have been secured on market-leading terms. We have already brought both the assets and the teams together into a consolidated platform. The final point I'll mention on this slide is the compelling acquisition price we were able to secure the Neoen Victorian assets for. This was achieved in part due to being able to provide high execution certainty in an event-driven situation. The acquisition price represents a 15% discount to replacement cost for the operating assets and around a 20% discount to recent transaction comparables for the operating assets. This is assuming zero value for the high-quality pipeline of approximately 2.8 GW of wind and battery assets. Slide 17 provides an update on our fundraising.
The energy transition platform is now focused on delivering value from the existing operating assets and the current development pipeline. Our goal is to raise approximately $1 billion of equity. Combined with a prudent level of debt financing, this is enough to fund the seed assets in full, progress two of the near-term developments into construction, and take the rest of the pipeline to financial investment decision. The fund will be structured as a seven-year closed-ended vehicle targeting returns of 15%- 20% IRR. We believe this strikes the right balance for institutional investors, strong returns underpinned by quality assets, and a clear pathway for growth. To support the fundraising process, we appointed Campbell Lutyens, one of the world's leading advisors in this space. Since their appointment, they've undertaken a detailed market sounding process and provided us with valuable feedback on the right structure for our fundraise.
The feedback from global investors has been very encouraging. There's strong recognition that Australia represents one of the most attractive markets worldwide for renewable energy investment. The fundamentals are compelling. We have growing demand, abundant natural resources, and a supportive and stable regulatory framework. Importantly, investors see real strength in the seed portfolio we've secured through the Neoen acquisition and Stor-Energy . These are high-quality, large-scale assets with a solid operational core and attractive near-term growth opportunities. As I've just mentioned, the Neoen portfolio was acquired at a material discount to market comparables. With an independent draft valuation of more than $1.3 billion, this creates a highly compelling entry point for new investors. Beyond the initial portfolio, our pipeline is a real differentiator. We have over 5.5 GW of renewable projects across Eastern Australia, spanning both wind and battery energy storage.
This scale, coupled with the quality of our management team, positions us exceptionally well to capture value as the energy transition accelerates. In summary, we are extremely well positioned to deliver an institutional-grade platform in one of the world's most attractive renewable markets. This is a significant step in establishing HMC as a leader in energy transition investment. Moving now on to slide 18 to discuss the platform team. Our strategy is to become a national champion in the renewable energy sector, supporting Australia's decarbonization goals while delivering attractive risk-adjusted returns for investors. We already have a high-caliber team with demonstrated capability and experience to execute on large, complex renewable energy projects. We have now commenced our hiring process to bring in a further 15 team members over the next 12 months to supplement the engineering, project delivery, commercial, and operational capabilities.
With this team and an enviable portfolio of operating development assets, I'm confident in the capital raise and excited to deliver the growth.
Thanks, Gerard. Moving now to slide 19 to discuss HMC Group's sustainability framework and the continued progress in implementing initiatives to create long-term value and positive community impact. In Financial Year 2025, we achieved a 32% reduction in Scope 1 and Scope 2 emissions across our like-for-like real estate portfolio compared to our Financial Year 2022 baseline. When factoring in the benefits of solar generation, embedded network allocations, and energy efficiency certificates, the reduction rises to around 50%. We exceeded our solar rollout target, installing systems on 70% of feasible sites across our real estate portfolio. These investments not only reduce environmental impact, but also improve the asset competitiveness and reduce tenant operating costs.
Our social impact work continued through the HMC Capital Foundation, with nine grants awarded to charitable organizations and ongoing support for our national charity partner, Eat Up Australia. On governance, we achieved 63% gender diversity amongst our independent board positions, 33% across the whole organization, and maintained an MSCI ESG rating of A. These results reflect our ambition to lead in ESG performance as our business continues to grow. I'll now hand over to Will McMicking to discuss our financial results.
Thanks, David. Turning now to slide 21. HMC recorded pre-tax operating earnings for FY 2025 of $225 million, or $0.56 per share. Management fee revenue increased to $147 million, which was driven by the AUM growth across the group, including the new private credit and digital infrastructure funds.
Performance and other fee revenue increased to $87 million, which included the capital partner fund's annual performance fee and the DGT establishment fee recorded in the first half. Investment income of $159 million included a $123 million contribution from the capital partner's fund investment, with the balance being dividend income from fund co-investments. Employee and corporate expenses were influenced by the increase in AUM growth. HMC employees have increased from 86 at June 2024 to approximately 290 as of June 2025. Expenses also included a $32 million impairment on the carrying value of the DGT investment to align with DGT's June 2025 NAV. Combined with an $8 million non-KMP employee retention grant, this resulted in a $40 million, or $0.10 movement from the prior FY 2025 trading update provided in May, as detailed in the chart on this page.
A final dividend of $0.06 per share has also been announced, taking full-year dividends to $0.12 per share. Turning now to slide 22. This is a new slide to highlight the growing earnings base from our funds management divisions. Funds management EBITDA was $102.6 million, which is a 160% increase versus FY 2024. This was driven by contributions from the credit and digital divisions established during the financial year. Turning now to slide 23. This slide details a number of expenses included in the FY 2025 operating earnings of $0.56 per share that are non-recurring in nature and total $18 million, or $4.50 per share. Non-recurring items comprise the $8 million one-off retention grant to non-KMP employees and a $10 million restructure of the StratCap USA business to right-size its cost base following HMC 's acquisition in the first half. Moving now to the balance sheet on slide 24.
HMC finished the financial year with net tangible assets of $1.3 billion, or $3.24 per share, after adjusting for goodwill. The reduction in NTA per share reflects the DGT impairment, as mentioned earlier, to rebase the carrying value of our co-investments to their respective funds NTA. We've also outlined a fund-by-fund co-investment summary on page 32. HMC has no drawn debt as at June 2025, which positions the group well to continue growing its funds management businesses into FY 2026, including energy transition. Turning now to slide 25. As highlighted on the prior page, HMC has no drawn debt at June, and combined with undrawn funding lines on our $675 million corporate facility, provides net tangible assets and undrawn debt of $2 billion as at June 2025. We've also used this page to provide additional information on financing arrangements at HMC.
HMC 's gearing ratio covenant for its $675 million corporate facility is 50% and is tested semi-annually based on our reported financial statement balance sheet assets, which are carried at their respective funds NTA. This means there is no daily mark-to-market pricing calculation on our corporate facility. I'll now hand it back to David.
Thanks, Will. In closing, we'll provide an update on our outlook for the financial year 2026. Financial Year 2025 results demonstrated our diversified alternative asset management platform and our ability to deliver strong outcomes for investors and shareholders. Our record Financial Year 2025 pre-tax operating earnings of $0.56 per share were positively impacted by the strong performance of our HMCCP fund. Looking forward into Financial Year 2026, we see a shift in earnings composition with greater balance across our established divisions.
We expect strong organic growth in recurring funds management income, with real estate targeting a 15% year-on-year EBITDA growth, private credit targeting 20% year-on-year EBITDA growth. Private equity will likely return to a more normalized level of performance with a target of around 15% per annum. Importantly, our newer digital infrastructure and energy transition platforms are positioned to deliver similar growth rates once they are operationalized. On this basis, we are targeting pre-tax earnings of at least $0.40 per share in Financial Year 2026. This represents a compound annual growth rate of 29% since Financial Year 2020, reinforcing the scalability and durability of our business model. These earnings also include investment income from HMC 's balance sheet co-investments, which equate to $3.24 per share of NTA as at June 2025.
Finally, our dividend guidance for Financial Year 2026 remains at $0.12 per share, consistent with our commitment to provide sustainable shareholder returns while reinvesting retained earnings into value accretive growth opportunities. With our diversified platform, growing recurring income base, and expanding suite of diversified strategies, we remain confident in our ability to deliver continued growth and value creation for our investors and shareholders. That ends this morning's presentation, and as you can see, Financial Year 2025 resulted in a large diversification in the HMC Group, and we're excited as we look into Financial Year 2026. I'll now hand back to the operator.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speaker phone, please pick up the handset to ask your question. The first question today comes from Tom Bodle from UBS. Please go ahead. Tom, your line is open if you'd like to ask your question. I might move on to the next questioner. It's Simon Chan from Morgan Stanley. Please go ahead.
Hi, good morning, David. Thanks for asking my question. In previous conversations, I think as recently as six months ago, you made comments around how you see HMC being a business that could deliver recurring underlying earnings of $0.45- $0.50 per share. Your guidance today is $0.40 or at least $0.40. Can you give me an indication as to what's changed since we last spoke? Is it just simply because you have a bigger workforce so you've got to take that into account, or what's the $0.05 - $0.10 difference?
I think, Simon, we've been prudent in providing that number. I think Will touched on some one-off costs in the business that you'll see we've invested probably ahead of the curve on. The $0.40 a share is a build-up of our view on the various verticals and the assumptions that we've given you today. As is always the way, we're probably going to give you that target for the year ahead, but we're planning to beat it. We're working hard. We've got a lot of different options. There's a lot of things we can see ahead of us, but we've really come out with that as a baseline to start the year.
Can you also give me some insights into, you know, inflows, outflows at Capital Partners I after the big dividend payment a few months ago now? I think in your prepared remarks you mentioned about, you know, it now has a three-year track record, et cetera. Just how's the inflows, outflows going there?
Look, I think what we're suggesting there with Capital Partners I, we've got a lot of very loyal investors. Where we see the future growth opportunity there is to go to the direct investor market, plus continue to go into wholesale platforms. One of the big gating items to wholesale platforms was ratings and three-year track record. Both of those have now been ticked, and we're confident that we'll be in a strong position to essentially continue fund flow there. Ultimately, our focus around that strategy, as I said earlier, is to drive great returns, great outcomes. We've got a lot of very happy investors there, and we're going to really consolidate that and cash in on that in the back half of the year through some initiatives that we're undertaking around fundraising.
Generally, what we've found is fundraising's really accelerated around that entity where we've gone out with event-led raising opportunities. As I said earlier, we're sitting on a lot of cash in that fund, 25%. Watch this space. We've got some initiatives underway in the back half of the year to accelerate fundraising there.
Thanks. My final question just relates to energy transition. Can you outline for us what's changed in your pitch on, you know, raising that platform? I guess you had a go prior to the 30th of June, right? That probably didn't go according to plan. You're now having another crack, albeit with a little bit more detail. There's going to be a five to seven-year close-ended fund. What's changed in your pitch to investors? Because you've already had a go.
Do you want to have a go at that, Gerard, and then I can add?
Yeah. Hi, Simon. It's Gerard here. I think the simple answer to that is narrowing the focus onto core areas of energy transition growth, basically wind and large-scale batteries. If you've seen, no doubt, the results of AGL, Origin, and other commentators, those are the core drivers of the growth within the energy transition. I think it's a narrowing of focus, and yeah, we're feeling very confident about delivering on it.
Simon, I'd say that we.
What was the previous pitch, though? Was the previous pitch just anything and everything, and people didn't like it?
Yeah, Simon, I'll add some color to that. I think the ambition a year ago was to look at a more diversified strategy, which picked up some of the peripheral areas in the market, things like hydrogen and some other storage-based technologies. I think the brutal reality is we bought Neoen incredibly well. We think we've probably got it 20% - 30% below market value. As a result of that, in discussion with Campbell Lutyens, and based on the development pipeline we have embedded and the upside opportunity we've got in the assets we have under control today on the platform, what the investor base has been telling us is just let us invest in the portfolio you've got, deliver the strategy against the assets you've got, no blue sky, and the capital will flow. That's why we've decided to narrow down the strategy.
We've decided to narrow down the focus. As you look at this market opportunity, the volatility in the energy market is going to continue to increase over the next five years. As a result, to play in that space, you probably wouldn't be long batteries. That's what we've planned to do. We've got one of the best development portfolios in the country, and we're going to execute into that, and we're going to deliver the value that we've got under control today. The thing is, when you go to market and you raise third-party capital and investors get to buy the assets off you in a sell-down, and they can see the assets and they can diligence the assets, that's a much easier capital raising model than going and selling a blue sky story. We're confident in now the strategy we've got.
I'm confident in the team we've got, and I'm confident in the outlook for that business.
That's very clear. Thanks, David. Thanks, Gerard.
Thank you. The next question comes from James Druce from CLSA. Please go ahead.
Yeah, hi. Good morning. An accounting question, I apologize in advance. AASB 18 rolling out over the next 12 months or so. [HMC] Fund need to mark to marking some of the listed co-investments. What's HMC's timeline for doing that, and how is that sort of prospectively going to affect things?
Yeah, James, as a business, we haven't made a determination yet, but you know, the carrying value of our assets, as we've outlined in the appendix, is aligned to net asset values of the fund, and you know, that's had full sign-off from our auditors, so we're comfortable with the current position.
All right. What's the, I thought that most people had to move on to that over the next 12 months. Is that the case?
We're still working through that, James. As I said, we haven't made a determination.
You sort of give us some good guidance just on EBITDA growth on some of the verticals. Just curious if you can just sort of lay out, and you've given some guidance already just on the deployment of PAM over the next 12 months that is highly certain and visible.
Yeah, we've touched on it, so I'll run through them again just to reiterate. Real estate, we've raised two new unlisted funds. We've got over $2 billion of dry powder to deploy there with committed capital. We've got another new fund in development. As I said earlier, within the capital partners opportunity, we've moved to a 25% cash position. The fund's performing well. It's hit at three-year benchmarks, so we see strong opportunities there in terms of capital flows. I would say to you that in terms of our private credit business, we've grown AUM there by 25% since we onboarded the Payton Capital platform just over a year ago. The group has had record inflows over the last two months. We've had nearly $100 million of inflows net into the private credit business over the last eight weeks. The strategy there's working. The uplifted governance standards are great.
Some of the loans we're writing are really pretty exciting on a risk-adjusted basis. Investors are liking what we're doing there, and so we're confident that we'll keep the trajectory going from existing fundraising sources. We've really focused on the core fund there, which we've uplifted to institutional grade. Over time, we'll look to introduce that to wholesale platforms. There's also a lot of inbound offshore interest from institutional investors for Australian private credit, particularly in the Asia-Pacific region. Private credit is not something that is accessible in markets like Japan, in markets like Korea, and in markets like Singapore. As a result, the team's been putting a major fundraising effort in there. We're talking small checks, $10 million, $20 million checks into our core fund, so there's really good opportunities there. In terms of energy transition, we touched on today what we're doing around the fundraising process.
It's a tweak. It's one that we're feeling much more confident around, and I know that we've got the team to deliver against that. Finally, on digital, I think the growth story there remains compelling. It's strong. As I was coming to the results presentation today, I saw the sales team at DigiCo in a room. They look like the busiest people in the organization at the moment. They're working pretty hard, getting busy. As I said, the pipeline's grown by fourfold there. If they can deliver that, get some leasing wins, the capital will start to flow. The business is in strong shape. It's really about a year of consolidation, delivering, and then setting us up for the next part of the next leg up in the journey. Have we lost the operator? I'll go back to the operator.
Guys, have we lost the call? [We] lost the operator.
All right, I think the operator's gone missing, maybe gone on a lunch break early. I'd say to you that our moderator's not there, therefore it's impossible for us to take questions because we don't have the two-way link. We're coming up to the hour. It's been a great update call. I know a lot of the analysts are coming in today for a session with us, so we look forward to seeing you then, and we'll take questions offline through the course of the day. Thanks to everyone for joining the call this morning, and we look forward to catching up. 2026 is going to be a big year for HMC Capital. Thank you.