The new owners of gutted Australian investment back-office firm, Sargon Capital, have pledged to continue operations in NZ despite losing its entire fledgling client base on this side of the Tasman.
A Sargon spokesperson confirmed the group’s NZ subsidiaries were included in the almost A$30 million takeover deal inked last week by a consortium of Pacific Infrastructure Partners (PIP), the newly-formed entity behind the transaction, and US private equity funder, Vista Credit Partners (VCP).
PIP, fronted by US-based private equity players Teddy Wasserman and Matthew Kibble, would also keep operating the rump Sargon NZ business the spokesperson said.
Sargon reportedly spent upwards of $10 million expanding into NZ through its late 2018 purchase of licensed supervisory firm Heritage Trustees after earlier acquiring the smaller New Zealand Trust Company.
Following a clean-out of the Heritage staff, Sargon signed on three NZ supervisory clients in 2019 with the promise of ‘technology-led’ trustee solutions. However, all three NZ corporate clients – established niche finance firm, Christian Savings, along with start-ups Kōura Wealth and Kernel Wealth – abandoned Sargon earlier this year when the debt-laden business fell into administration.
Wasserman and Kibble were both directors and investors in Sargon, which grew exponentially on the back of complex funding agreements following its 2013 launch. Founded by Philip Kingston (who also served as chief executive) and Aron D’Souza, Sargon was involved in a string of acquisitions as well as a number of legal stoushes – including one between the two co-founders. Sargon was also embroiled in a costly dispute in 2017 with Andrew Barnes, owner of trustee roll-up firm Complectus, following an aborted $200 million buyout of the NZ supervisor business.
The complicated Sargon group structure began unraveling late in January 2020 in the wake of debt repayment demands from a Hong Kong-based creditor. And the dominoes collapsed quickly when ASX-listed fund administration business, OneVue, pursued Sargon for about A$31 million due on the 2018 sale of superannuation trustee firm, Diversa.
OneVue took possession of several Sargon assets, including financial planning firm Madison (due to be sold this month) as well as shares in US venture capital firm Sequoia Capital, and is in the queue for a piece of the latest sale proceeds.
In a release to the ASX last Tuesday (May 5), OneVue said: “The sale of the [Sargon] operating businesses completed today and $29.6 million has been paid into the Voluntary Administrators’ controlled money account.
“The controlled money account is to be held by the Voluntary Administrators for the purpose of meeting claims by the Voluntary Administrators, OneVue, Westpac and the third parties who have asserted ownership rights over intellectual property assets which are to be sold.”
Warring parties return to court on June 15 to “fix a date” for settlement of claims.
OneVue says it would not be able to assess recoverable amounts until the final court determination, however, the firm “continues to assess its options for the recovery of the balance of the receivable from the Sargon Group parent company, Sargon Capital”.
Meanwhile, Wasserman said in a statement that Sargon’s “proprietary next-generation trustee infrastructure… has developed to be world-class technology”.
“As the new owner, PIP brings funding capacity, leadership capability and strengthened governance to unlock its enormous potential, as well as take advantage of what is a significant market opportunity, given the sector tailwinds and underinvestment in legacy systems,” he said.
Fellow Sargon shareholder VCP, the credit arm of Vista Equity Partners, “also provided financing for the transaction”, the release says.
Australian financial services veteran, Sue Thomas, has joined Wasserman and Kibble on the PIP board, which has set its first task as finding a replacement for departed Sargon chief, Kingston.
Sargon NZ still reports four board members: Edward Russell (also managing director); Darran Goodger; Harold Titter; and, Mel Hewitson.
