Embattled fintech Sargon owed OneVue $31 million for the sale of the trustee services business Diversa Trustees, having only paid up $12 million in cash out of the total $43 million when the deal took place last year. The remaining $31 million was originally due by 30 November, but OneVue had extended its deadline.
OneVue managing director Connie Mckeage told shareholders in a conference call on Wednesday that her company had learned in November that Sargon had been unable to secure the outstanding funds required and instead was focusing its efforts offshore where it had attained more than $100 million in funding previously.
However, after Sargon’s creditor Taiping Trustees appointed receivers and managers to the company over a debt facility it had provided, a number of Sargon subsidiaries entered voluntary administration at the start of February.
OneVue then appointed receivers to Sargon subsidiary SCAH1 to protect its interest. They subsequently secured Sargon’s holdings in Sequoia Financial Group and its ownership of Madison Financial Group.
With the release of its results, OneVue confirmed that it had received $4.3 million for the sale of the 19 per cent stake in Sequoia. Its next priority is selling off Madison.
But OneVue has now made a provision of $26 million against the Sargon receivable, reducing its recoverable value to $3.86 million.
It stated that Sargon’s administrators are selling the Sargon Trustee and other business assets on an “urgent basis”, saying it will better understand Sargon’s position as the saga unfolds over the next few months.
OneVue said it made the provision after taking into account a number of factors, including asset sale realisations in a distressed sale situation, the risk of diminished value in Sargon entities with significant client loss risk and key staff risk, and the unclear financial asset and liability positions of Sargon and its subsidiaries.
For the six months leading up to December, OneVue’s EBITDA had risen by 48.2 per cent year-on-year to $3.3 million, while its total revenue had slipped by 3.8 per cent to $24.3 million.
Fund services, including its managed fund and super member administration represented 63 per cent of its total revenue. The other segment, platform services, saw its funds under administration rise by 36 per cent from the prior corresponding period to a high of $6 billion.
Ms Mckeage said the business will have “continuing growth momentum”, with investment over the last two years in automation and integration.
“Most importantly, the high-profile Sargon matter has not affected OneVue’s ability to service our clients on a day-to-day basis,” she said.
“In fact, our clients have been extremely supportive during this period. Nor has it impacted our ability to fund our future growth plans.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].