Years of red ink before Sargon's downfall

The holding company of a high-powered fintech superannuation group
that has tumbled into receivership, Sargon Capital, bled nearly $25 million over 2017 and 2018 and is yet to file accounts for last financial year.

Sargon, whose board had included entrepreneur Phillip Kingston, former Crown Resorts chairman Rob Rankin and ex-Senator Stephen Conroy, had posted losses of $5.6 million in 2018 and $18.7 million in 2017, according to latest accounts filed with regulators.

The losses were linked to “many once-off and non-recurring costs relating to acquisitions, integration, market expansion and technology development”, the 2018 accounts said.

It came with revenues rising from $7.9 million to $20.2 million.

Sargon’s operating cash flows were also in the red for both years, while it still recorded net assets of $71.9 million in 2018 including goodwill of $35 million.

Sargon, a large unlisted start-up that was established only in 2015, has still not filed accounts for the June 2019 year. That puts Sargon beyond a four-month window to lodge figures, according to general guidance for companies from the Australian Securities and Investments Commission.

It is not uncommon for large companies to post results late but it can indicate an entity is juggling issues. Sargon had deferred payment of $31 million from November last year to May this year for acquiring a business from ASX-listed OneVue, while plans for a sharemarket float of the fintech company also failed to eventuate.

Sargon and two other entities associated with investment and advisory firm Trimantium were put into receivership this week by companies of the state-owned China Taiping Insurance Group. McGrathNicol’s Jason Preston and Shaun Fraser are the receivers.

Business as usual

Mr Kingston, 34, is a director of all the entities in receivership and chief executive of Sargon. Mr Rankin had stepped down earlier in January from Sargon’s board; sources with knowledge of the departure said it was unrelated to the receivership.

Melbourne-based Sargon boasts it provides “trustee cloud infrastructure to power the world's next generation of funds and financial products”, with more than $55 billion in assets under trusteeship and supervision.

It tried reassuring clients overnight, with a note on its website saying business was unaffected as Sargon Capital was “a holding company” and “operating subsidiaries are not in any form of external administration”.

“Sargon confirms that assets held on behalf of clients are not at risk by way of the appointment of McGrathNicol and are protected by regulatory, legal and other protections,” the note said.

It was business as usual at Sargon's sleek Collins Street office on Friday, with staff seen working at their desks in the open-plan area.

AFR Weekend was told that Mr Kingston was out of the office at meetings all day.

The two Trimantium entities in receivership are Trimantium Capital Funds Management, which Trimantium’s website describes as a “trustee and investment manager of various wholesale investment products”, and Trimantium Investment Management, which is fully owned by Trimantium Ltd. Mr Kingston is chairman of Trimantium Ltd.

Apprehension on the Chinese side

Regulatory filings show China Taiping entities were the only security holder over the three entities, linked to three promissory notes from 2018 worth up to $HK500 million ($95.6 million) each and a loan in 2019 of up to $HK653 million. All the notes were marked “Sargon”.

No one could confirm the trigger for the China Taiping entities calling in receivers. One source with knowledge of the situation said there had been apprehension on the Chinese side late last year regarding Sargon, while another said Sargon had not missed any payments on a facility not for repayment until 2021.

Sargon was involved with other ASX-listed entities.

That includes Trimantium GrowthOps, whose directors include Mr Kingston, recording earning interest of $163,459 on “short-term fully realised investments” of $6 million and $3.5 million from an entity controlled by Sargon, according to accounts.

GrowthOps told AFR Weekend that “Sargon Capital continues as a GrowthOps’ client today”, but no investments remained from Sargon Capital entities.

Sargon also held 19.3 per cent of the shares in ASX-listed Sequoia Financial, until this was transferred to Sargon’s fully owned subsidiary SC Australian Holdings 1 in December last year.

Attempts to obtain comment from Mr Kingston, Mr Rankin and Mr Conroy were unsuccessful.