Sequoia shares acquired by receivers as Sargon saga widens

Almost a fifth of shares in ASX-listed financial services company Sequoia are now in control of receivers after PriceWaterhouseCoopers secured stock held in an entity relating to Sargon Capital.

Superannuation services business OneVue brought in receivers to review a non-operating subsidiary of superannuation fintech Sargon this week. Sargon owes an outstanding $31 million payment to OneVue for its Diversa trustee business, which it bought last year.

Sargon Capital's chief executive Phillip Kingston has global aims for its suite of superannuation and trustee cloud services.Credit: Arsineh Houspian

Last week a holding company of Sargon Capital had receivers from McGrathNicol appointed. At the start of the week, voluntary administrators from Ernst & Young were appointed to a number of other non-operating entities relating to Sargon.

Sargon Capital is headed up by chief executive Phillip Kingston and has global aims for its suite of superannuation and trustee cloud services. Last year it bought OneVue's trustee platform business but is due to pay a remaining $31 million payment by May 2020.

On Tuesday, OneVue told investors it had asked PwC to step in to perform an "urgent assessment" of its position in relation to the payment after a non-operating entity of Sargon entered voluntary administration.

On Wednesday, OneVue said PwC receivers Chris Hill and Daniel Walley had taken control of more than 23 million shares of Sequoia Financial Group after reviewing the company SC Australian Holdings 1, representing 19 per cent of the company's total stock. The stock is worth about $4.6 million and OneVue will now "assist the receivers to realise the full value of this asset".

"The receiver is continuing to work on an urgent basis to realise value for OneVue and we will continue to keep the market updated," OneVue said in a statement lodged with the ASX.

Sequoia's chief executive Garry Crole said he would like to see OneVue keep hold of the acquired stock but Sequoia was willing to buy back 10 per cent if the stock went to market. Mr Crole said buyers were already circling the remaining 9 per cent that could be acquired relatively cheaply as the stock price takes a battering.

"We're very happy to have OneVue as a shareholder if they decide to keep the shareholding, very good, if not we've got other people that are interested in the holding," Mr Crole said.

Sequoia stocks have been acquired by liquidators as part of OneVue's damage control over Sargon's collapse. Credit: Eamon Gallager

"It just means we've got selling pressure on our stock."

Mr Crole said there had been some warning signs that Sargon was not faring well.

"It didn't come as a shock," Mr Crole said of the company's troubles.

"I did expect Sargon to trade their way out but the fact they didn't settle on the OneVue purchase on four or five occasions and continued to extend it made us unsure of their ability to fulfil their obligations."

In a note to clients, Bell Potter estimates OneVue will receive only around 50 per cent of Sargon's outstanding debt yet is retaining its buy recommendation in OneVue stocks.

Sargon Capital referred requests to comment to administrators of its subsidiaries on Wednesday afternoon. Ernst & Young has been appointed voluntary administrators of several non-operating entities relating to Sargon, including SC Australian Holdings 1. Ernst & Young referred requests for comment to the PwC receivers acting on behalf of OneVue.

PwC was unable to provide further comment.