Gemi Investments prepares to lose 100c in the dollar on loans to Jon Adgemis pubs
Private lender Gemi Investments has warned investors it is preparing to lose every cent it lent to Jon Adgemis with a looming downgrade likely to blow through its $5m financial buffer.
Private lender Gemi Investments faces a near wipe-out on its loans to former pub baron Jon Adgemis, telling investors forecast losses will exceed $5m.
The Sydney funder warned its wealthy backers to expect no return, and as such, Gemi was taking a 100c in the dollar provision against the debt extended on five venues.
The unfolding disaster at Gemi may make the secretive fund a casualty of the red hot private market. Adding to its woes, Gemi indicated neither of its remaining 35 loans would be realised over the rest of 2025 “primarily due to the timing and complexity of the recovery strategies currently underway”.
Gemi has been unable to secure auditor sign-off on its accounts, and flagged the prospect of a further “downward adjustment” or provision. The fund said it had a $5m financial buffer that would absorb losses before they hit investors’ pockets, but the inevitable adjustment would “exceed this credit enhancement amount”.
Gemi Investments was one of Mr Adgemis’ largest single backers, pouring at least $390m into his distressed hospitality group.
McGrathNicol acting as receiver is selling the remaining five pubs seized from Mr Adgemis in September, after another lender, Deutsche Bank, moved to protect itself as the businessman inched closer to bankruptcy.
Those five venues could yield nearly $100m. The South Bondi Hotel, the former site of Noah’s Backpackers, could deliver a $60m-$80m price tag, listing agents hope. Gemi attempted to tap clients for a $54.8m loan on Noah’s, adding to the first ranking Deutsche Bank loan already secured against the property.
The private lender headed by George Fleming and Justin Epstein said it was too early to quantify its return, but sources close to the deal said Gemi was unlikely to get any of the proceeds.
Even worse, Gemi told investors only 9 per cent of its loan book was unencumbered by legal disputes or in attempted workout situations. No loans in the Gemi fund are current and performing, meaning none are yielding a result for the lender.
In June, Gemi had told investors nearly 15 per cent of its loans were current, with the dramatic worsening of its position happening despite the loan book shrinking by just two exposures over the period.
Investors were paid a 2c distribution, accruing a return of 19 per cent. Withdrawals in the fund are frozen.
Among its other troubled loans, a Gemi-funded development in Sydney’s Castle Hill was progressing after earlier attempts to sell the massive site fell flat. It is now attempting to develop the 17,000 square metre block, submitting a development application, with hopes of a determination in mid-2026.
The private lender is also struggling to sell the site of Channel 7’s Adelaide office, after having lent on that property too.
Gemi was one of several private credit lenders scrutinised by the Australian Securities & Investments Commission as part of its review into the $200bn sector. ASIC warned several operators were in breach of financial disclosure laws as well as failing to appropriately book distressed and troubled loans.
Class action lawyers are circling Gemi, The Australian has learned.
More Coverage
Originally published as Gemi Investments prepares to lose 100c in the dollar on loans to Jon Adgemis pubs
