David Di Pilla’s lucky streak at Sigma
As luck would have it, David Di Pilla was there just at the right time.
Street Talk understands Australia’s top bankers can’t stop talking about the former UBS banker and major Sigma shareholder’s apparent stroke of genius on Project Orbit. Naturally, these are the same people who have been chasing a Chemist Warehouse IPO for almost a decade and just lost out on a big pile of fees, so you can excuse them for being a bit salty.
HMC Capital boss David Di Pilla: Sigma and Chemist Warehouse’s tie-up valued the combined group at about $8.8 billion. Peter Rae
Di Pilla’s HMC Capital Group first popped up as a substantial holder in Sigma in late June 2022, rapidly increasing its stake to 19 per cent by January 23 this year. Since then, Sigma has gone from strength to strength, snatching a lucrative $2 billion Chemist Warehouse supply contract off its much-bigger rival EBOS in June 2023 and now inking an $8.8 billion agreement to swallow the pharmacy giant in a reverse listing.
Not bad for a company whose market capitalisation was less than $500 million two years ago, or Di Pilla, who shortly after Sigma won the CW contract found himself at dinner with Sigma boss Vikesh Ramsunder masterminding a merger which was about to enrich HMC.
Since HMC Capital first publicly emerged on the register, Sigma’s stock has jumped from around 50¢ to 76¢ – or a more than 50 per cent increase. Our rough back of the napkin calculation puts HMC’s total gain at roughly $40 million (pre-tax), just on the share price increase alone. Not bad for a couple of years of work.
Di Pilla’s HMC will emerge with a board seat and around 3 per cent of the new company, should the deal go through, leaving the former investment banker knocking on the door of the Rich List. There, he’ll be surrounded by friends, his sister, Danielle Di Pilla, a Chemist Warehouse franchisee, scoring a board seat under the deal. His first cousin, Mario Verrocchi, co-founded the company in the mid-1990s alongside Jack Gance. Talk about keeping it in the family.
However, HMC Capital Partners Fund 1 is an unlisted investment fund and Di Pilla’s individual holding in the entity (which holds Sigma) is unclear. His earlier success with Home Consortium, the former Woolworths Masters properties, had him just below the cut-off on previous Rich Lists.
Plan B
Sources also scoffed at the suggestion Di Pilla cooked up the idea over raw fish, noting that EBOS was understood to have held the same talks with CW about taking a similar path to the ASX in the past 12 months.
Talks fell over due to the company’s well-understood regulator issues in NSW, which it’s sought to clear in the lead-up to its backdoor listing alongside an internal restructure. Sigma presented a good plan B, and Di Pilla, who has a foot in both camps, was there to make the connections.
On the deal itself, market watchers called out the glaring conflicts of interest. What’s being sold in the reverse takeover is CW’s franchise business, many of whom are friends and family of the founders. Once inside Sigma, CW will be involved in economic decisions about what Sigma and franchisees get, meaning it could extend economics from Sigma to its network and control the distribution of its private-label brands. While these conflicts could be managed, details have remained absent from investor presentations.
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