Bloodied Mayfair tries recruiting investors against ASIC

Embattled funds outfit Mayfair 101, whose investments span from Dunk Island to a restaurant payments app, is trying to recruit investors to fight off an “unjust attack” from the corporate regulator.

Mayfair 101 has pinned blame on the Australian Securities and Investments Commission for problems befalling the outfit, and has also now accused the trustee of its IPO Wealth fund of taking “premature and imprudent” actions.

That was after the trustee on Friday appointed receivers to a Mayfair 101 entity that had borrowed more than $70 million from the fund.

The overall group also told backers that “top-tier restructuring experts” have been hired to preserve value for investors across Mayfair 101, which has raised more than $210 million.

Mayfair 101’s IPO Wealth fund was launched in 2017. But business exploded last year when its Mayfair Platinum brand started a blitz of advertising, including in The Australian Financial Review, and the investment outfit acquired Dunk Island as part of a $180 million tourism mecca plan using YouTube videos and Instagram influencers.

Still, financial experts expressed concern about a lack of detail about investments.

By March this year, it had frozen redemptions on the Mayfair Platinum notes. ASIC then in April sued Mayfair 101, alleging advertising for two Mayfair Platinum promissory notes was misleading. Mayfair disputes that allegation.

In a subsequent update to investors seen by the Financial Review, Mayfair 101 said it appreciated “the many phone calls, emails and letters of support that we have received from investors voicing their disagreement with ASIC’s allegations and offering their assistance”.

“We are disappointed that the regulator has sought to challenge a compliant business in the midst of COVID-19, particularly given our historical strong track record in meeting our obligations to investors,” it said.

"This has been a significant setback for the group that has directly contributed to our liquidity challenges, and is an issue we take very seriously

“If you feel strongly about ASIC’s allegations like we do, we would love to hear from you. We are engaging with various stakeholders to counter what we consider to be an unjust attack by the regulator.”

In a separate update, published after the Financial Review revealed the appointment of receivers, Mayfair further claimed ASIC’s “overreaching actions” had exacerbated already challenging circumstances and “contributed” to the IPO Wealth fund trustee Vasco’s decision to appoint receivers.

ASIC declined to comment.

The trustee Vasco said on Friday it had appointed the receivers after IPO Wealth Holdings, whose sole director is Mayfair 101 founder James Mawhinney, had missed repayments worth almost $3 million two weeks ago.

IPO Wealth Holdings had borrowed money from the fund and invested in various assets, such as Indian software accounting outfit Accloud.

The receivers, Hamish MacKinnon and Nicholas Giasoumi of Dye & Co, are looking at selling assets to recover money for fund investors.

Vasco had said that it received “no communication” from IPO Wealth Holdings about why repayments were missed “despite a number of attempts to contact them”. It also alleged to have received “no meaningful response” about a restructure proposal.

But Mayfair 101 maintained:

• No attempts were made by Vasco to contact “the group” in the “week leading up to the appointment of receivers”;
• Vasco had also not responded to an email last Wednesday advising “initiatives” for a restructure;
• Vasco had not consulted the funds investment manager IPO Wealth Pty Ltd, whose sole director is also Mr Mawhinney, about appointing receivers

The receivership was a “premature and imprudent measure by Vasco given the current economic conditions imposed by COVID-19 and one that is likely to result in the unfortunate and unnecessary destruction of value for investors” in the fund, Mayfair 101 said.

Neither Mayfair nor Vasco responded to queries on Monday.