Sargon NZ supervisor clients have deserted en masse as its troubled Australian parent seeks to regroup under a buyout reportedly led by one-time director, Teddy Wasserman.
Last week Public Trust signed on two of the three Sargon NZ supervisor clients, Christian Savings and Kōura KiwiSaver scheme, amid turmoil in the Australian operations.
It is understood the remaining Sargon NZ client, Kernel Wealth, would also jump to another supervisor shortly with usual suspects Trustees Executors, Guardian and Public Trust in the frame.
Dean Anderson, founder of the digital passive fund provider Kernel, said the start-up firm was “assessing options” for the supervisory role.
“It’s not such a big issue changing supervisors – at least for simple schemes,” Anderson said.
Sargon entered the NZ licensed supervisor business late in December 2018 with the purchase of Heritage Trustees for an alleged $10 million.
Armed with mysterious sources of funding Sargon sought to take on the staid NZ trustee business with cutting-edge technology developed for the Australian market.
And while the Sargon tech turned a few heads at launch in NZ late last year, debt woes at the Australian parent have effectively scuppered the trans-Tasman campaign.
Sargon was placed into administration in January as a Hong Kong debtor sought repayment, sending shockwaves that have since split the firm across its credit fault-lines.
ASX-listed fund administration business, OneVue, subsequently assumed control of some Sargon private equity assets and a financial advice dealer group. Administrators EY confirmed late last month that a buyer was circling the core Sargon trustee assets – including the NZ arm. The Australian Financial Review named the mystery buyer as US-based Sargon Capital director, Teddy Wasserman.
Wasserman is not listed as a member of the Sargon board that has shrunk to just three: founder Philip Kingston; executive director, David Chen; and, independent board member, Stephen Conroy.
Sargon chair, Robert Rankin, resigned late in January at about the same time as his counterpart in the NZ business, Richard Hanna, also left the board.
The US private equity investor, Wasserman, reportedly plans to keep the business operating in Australia under the Sargon brand.
Late in February, Australian robo-advice platform, Raiz (formerly known as Acorns), replaced a Sargon-owned business as custodian with Perpetual Corporate Trust. In a release, Raiz said it shifted from the Sargon subsidiary, Australian Executors Trustee (AET), to Perpetual effective February 27.
Sargon bought AET from the ASX-listed IOOF in 2018 for A$51 million.
It’s not clear yet where the remnant Sargon NZ assets, such as the private trust clients, will wash up but the licensed supervisor business is unlikely to resurface.
Old-school providers such as Public Trust, meanwhile, get to mop up the new-tech mess.
In a release, Andrew Hughes, Public Trust head of corporate trustee services, said: “We’re pleased to be the licensed supervisor of choice for these two organisations [Christian Savings and Kōura ] and appreciate the trust they have placed in Public Trust to be responsible to their investors.”
The government-owned Public Trust holds over $90 billion as trustee or supervisor.