Lindsay Tanner joins bid effort to rebuild trust in Sargon

Lindsay Tanner is to chair a new entity that has bought the operating businesses of collapsed financial services firm Sargon.

Lindsay Tanner and Marcus Price of Pacific Infrastructure Partners.

Lindsay Tanner uses a football ­analogy to explain his surprise role in the new entity that has purchased the operating businesses of collapsed financial services business Sargon.

“The challenges that we face here are similar to the challenges I faced taking on the Essendon role five years ago,’’ the former Labor minister says of his presidency of AFL club Essendon, which he took on in the wake of the club’s notorious doping scandal.

“We have had to rebuild that trust and acceptance within the football world literally from the ground up. I would argue that process has been complete. So this is a challenge that I relish.”

The Australian can reveal that Mr Tanner and Marcus Price will be the chairman and chief executive, respectively, of the entity known as Pacific Infrastructure Partners, which has purchased Sargon’s trustee, corporate trust and responsible entity operations and its proprietary technology infrastructure.

PIP is currently completing a process — pending final approvals — to rebrand Sargon to the name Certes Group, a word derived from Latin meaning truth, assurance and certainty.

“The challenge now facing everyone in the sector is making competition work for members. One of the great lessons from the Hayne royal commission is that competition isn’t working as well as it should be,’’ Mr Tanner, who is also a Suncorp director, told The Australian.

“This is a great opportunity to be a senior player in a company that will bring more competition, innovation and choice into the nuts and bolts upon which the sector runs,” Mr Tanner added.

Mr Tanner and Mr Price, a former chief executive of the Link-backed e-conveyancing group PEXA, are under no illusions as to the task ahead.

Sargon, whose board included entrepreneur Phillip Kingston, former Crown Resorts chairman Rob Rankin and former Labor senator Stephen Conroy, was tipped into administration earlier this year by one of its biggest lenders, Chinese state-owned insurance company Taiping Trustees.

The entities being purchased by PIP continued trading as seven Sargon holding companies went into administration in February in a process that was handled by accounting firm EY.

The collapse put paid to the grand ambitions of Mr Kingston to turn Sargon into a thriving fin-tech business. He is no longer involved in the assets being purchased by PIP.

Listed platform provider OneVue, which is still owed $31m from its original sale of Diversa Trustees to Sargon before the company fell into administration, is seeking to recover its share of the sale proceeds through the Federal Court. PIP is not involved in that action.

“Trust isn’t rebuilt in a day,” Mr Price said. “The reasons for the voluntary administration were not associated with the business itself. The business itself is fundamentally a good business. Most of its customers have stuck with it. That shows faith in what the business was doing.’’

Mr Price has been advising PIP in the acquisition process. International strategic credit investor Vista Credit Partners is a minority strategic investor in PIP, alongside New York-based financiers Teddy Wasserman and Matthew Kibble. Mr Price and Mr Tanner also have equity in PIP.

“It has been very unfortunate for the staff. It’s not ideal,’’ Mr Price said of the problems of ­Sargon.

“But there is a real role for this sort of business in this industry, an entity that is prepared to work with the smaller funds to develop their innovation agendas. It would be a real loss if you didn’t have the incubator trustees to help these funds emerge.”

Despite its troubles, the business still has $50bn in assets under trusteeship and super­vision.

Mr Price revealed that PIP would make an initial capital injection to the business of $50m and that it would be open to bringing more investors on board.

“The regulators were very ­focused on ensuring we had a strong balance sheet. Especially in terms of cash,” he said.

“So the company is well capitalised and has access to other funds as required.

“There would be a preference by the shareholders to bring in marquee Australian investors into this business in due course.

“Vista are well aware they are an American outfit. They would certainly be looking for Australia-based investment from here on in and Australian institutional money that can bring knowledge from Australia. As the business expands, that will be one of the objectives of the group.”

Mr Price said the firm wanted to bring new technology and ­innovation to the industry, ­especially to improve efficiency and functionality.

“The one-size-fits-all model doesn’t work for the smaller funds,’’ he said.

“We are developing tools around compliance and monitoring that enhance transparency for trustees and the regulator. We lead the pack in that. The company will want to look at horizons beyond what it currently does in the super industry. We are doing a strategic review on this at the moment.”

As previously announced by PIP, financial services executive Sue Thomas has joined PIP as an independent non-executive director.