Enigmatic technology billionaire and Donald Trump adviser Peter Thiel secretly amassed – and then unwound – a multimillion-dollar stake in an obscure Australian financial services business.
Mr Thiel, widely regarded as the most powerful man in Silicon Valley, was behind investments in a Melbourne-based holding company, Sargon Capital, with plans to buy up smaller Australian financial administration providers. This included an Adelaide firm that holds the superannuation licence for Spaceship, the new fund backed by local technology luminary Mike Cannon-Brookes.
A “pitch deck” circulated to potential investors in late 2016 obtained by The Australian Financial Review claimed Mr Thiel had committed to invest $47.5 million into Sargon Capital, which describes itself as a “full-stack financial infrastructure platform for regulated financial products in Australia” and is run by Melbourne businessman Phillip Kingston.
Subsequent regulatory filings reviewed by the Financial Review show an entity registered to the same address as Mr Thiel’s many investment vehicles had sold its Sargon investment to Trimantium Capital, Mr Kingston’s private equity fund, making it the majority shareholder. This appears to remove the PayPal co-founder from a web of structures that could have allowed him to launch an assault on Australia’s $2 trillion retirement savings pool.
According to the deck, Sargon, which was in “stealth mode”, planned to acquire $20 billion in assets under management, trusteeship and supervision, by buying up and merging smaller administration companies.
In an updated version of the deck circulated to US investors in February, also seen by the Financial Review, all references to Mr Thiel were removed.
Sargon is a holding company for Trustee Partners, which told the Financial Review in September last year it had raised $100 million from investors for its plans to inject innovation into superannuation administration.
Mr Kingston led a delegation of investors, politicians and media to San Francisco last year to meet with companies and venture capital firms, including Mr Thiel’s Founders Fund. However, Mr Thiel’s explicit backing of Mr Kingston’s ventures, and subsequent withdrawal, has not previously been disclosed.
Representatives for Mr Thiel’s Founders Fund and Thiel Capital did not respond to a request for comment. A spokeswoman for Sargon confirmed that “no Thiel-associated entities are invested in or with Trimantium or Sargon” any more. The spokeswoman would not confirm Mr Thiel’s involvement in Sargon, saying in an emailed statement that “the name of any individual involved is confidential. However, the names of the companies are a matter of public record and are disclosed on the ASIC website.”
Thiel Capital portfolio manager Matt Danzeisen stepped down as a director of Sargon and two related subsidiaries this year, filings show and representatives for Sargon confirmed.
Sargon is one of several technology focused superannuation ventures involving Mr Kingson and his business associate Aron D’Souza.
The pair were behind Good Super, the ethical superannuation fund which copped a $20,000 fine from the corporate watchdog in late 2014. The fines accrued to Como Financial, the promoter and Equity Trustees, the previous trustee.
Tidswell was in possession of one of just 219 Registrable Superannuation Entity licences required to manage retirement savings in Australia.
In late 2016, Trustee Partners won an important client with ties to the tech sector when Spaceship appointed Tidswell as its trustee.
Trustees and responsible entities are licensed by regulators to issue and operate financial products such as super funds, to ensure they are complying with the law, and to protect the interests of the ultimate investors.
Financial services technology
Run by Paul Bennetts, a former AirTree Ventures partner, Spaceship has shot to prominence in Australia in recent months, aggressively marketing itself to millennials working in the technology industry, promising to invest its members’ money “where the world is going, not where it has been”, through a diversified portfolio with tech stocks at its core.
Pledging a greater weighting towards technology stocks than conventional super products, and eventually, exposure to unlisted start-ups, it recently said it was close to securing $100 million in commitments from members in just a few months.
Some investment experts have questioned Spaceship’s high fees and relatively risky portfolio yet curiously low target returns, set by its asset consultant Atchison.
Others have praised Spaceship’s innovative marketing strategy for successfully engaging millennials in financial products and encouraging them to think more carefully about how their retirement savings have been invested.
Mr Thiel’s brief investment in Tidswell via Sargon pre-dates the creation of Spaceship, which announced its arrival in September of 2016.
The billionaire made his fortune in financial services technology as a co-founder of online payments firm PayPal, and as an early investor in Facebook.
Mr Thiel, who secretly funded a lawsuit involving Hulk Hogan that brought down the controversial website Gawker last year, shocked the mostly liberal Silicon Valley establishment in expressing strong support for Donald Trump.
He has since been engaged in a more formal capacity as an adviser and technology industry emissary for the US President.
Known for his eclectic mix of investments, including in CIA linked security firm Palantir and in blood transfusion technologies to prevent ageing, the billionaire has been active in this part of the world. In 2012 he invested in Sydney-born cybersecurity firm Script Rock, which has since rebranded as UpGuard.
Mr Thiel, who it recently emerged took out New Zealand citizenship in 2011, has been more active on the other side of the Tasman. He owns nearly 5 per cent of cloud accounting provider Xero.
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