Sargon NZ has been sold as part of a package deal brokered by the Australian parent group’s administrator, EY, according to reports across the Tasman last week.
The NZ business, which includes the licensed supervisor previously known as Heritage Trustees, is one of eight Sargon subsidiaries bundled in a fire-sale agreement with an unnamed buyer, Australian media reported.
Stewart McCallum and Adam Nikitins, the EY partners handling the Sargon administration, confirmed a deal was on the table for assets understood to cover the group’s Australian and NZ trustee and administration businesses.
“Whilst the terms of the deal remain confidential, and subject to a number of conditions precedent, if successfully completed Adam and I believe this will provide the best outcome to fund members, clients, employees and creditors, given the unique circumstances the companies face,” McCallum said in a statement.
Likely buyers for the Sargon assets could include rival Australian trustee firms such as Equity Trustees or Perpetual Trustees, industry sources suggest.
Sargon reportedly paid $10 million for Heritage in 2018 as the Australian firm, co-founded by Phillip Kingston, sought to shake-up the NZ fund supervisor market. While Sargon NZ has only secured a handful of small clients – most notably the $180 million non-bank deposit-taker Christian Savings – a sale would create some regulatory complications.
A spokesperson for the Financial Markets Authority (FMA) said: “We are seeking further information on the reported sale and its implications for the NZ licensed entity.”
Any ownership change of a NZ licensed supervisor “would likely be a material change of circumstances, and the FMA would expect to be formally notified”, the spokesperson said.
“We can confirm that we’re in discussions with both Sargon NZ and the administrator, EY, regarding the sale of the parent, Sargon Group, and are receiving regular updates.”
As well as Christian Savings, Sargon last year won the supervisor gigs for start-up KiwiSaver scheme Kōura Wealth and digital-only NZ index share manager, Kernel Wealth. Kōura had about $2.4 million under management and 80-plus members as at the end of December while Kernel held just under $1.2 million at the same date.
The supervisor instability would be an unwelcome distraction for Sargon NZ clients, who may choose to shift allegiances rather than wait for new owners to blow in.
At the very least, Sargon NZ ‘technology-led’ growth plans lie in tatters. Edward Russell, Sargon NZ chief, was not available for comment.
The most recent Sargon sale does not include the Australian financial planning group, Madison, which creditor, the ASX-listed fund administrator OneVue, seized earlier in February.
OneVue, owed A$31 million for the 2018 sale of Diversa Trustees to Sargon, plans to offload Madison. OneVue booked a half-year A$27 million loss after writing down the Diversa proceeds despite clawing back A$4.3 million from the sale of Sargon’s 19 per cent stake in US venture capital firm, Sequoia.
Sargon says on its website that the EY administration covers “the holding companies that sit between Sargon Capital, and its operating trustee entities”.
“The voluntary administrations are not over the companies responsible for Sargon’s trustee and regulated businesses, such as Tidswell Financial Services Ltd, Diversa Trustees Ltd, Sargon CT Pty Ltd, CCSL Ltd, Madison Financial Group, or Sargon (NZ) Ltd,” the statement says.
However, the list of eight in-administration entities includes Sargon International Holdings 2, the ultimate holding company of the group’s NZ operations.
