PAC Capital owner Clayton Larcombe may have bailed out investors
The Australian Securities and Investments Commission has notified PAC Capital owner Clayton Larcombe that it doesn’t intend to take legal action against him – for now.
An investigation into the Sydney fund manager, who had boasted of his ambitions to become one of the city’s leading asset managers, could have led to him being banned as a director over problems at PAC Capital. Two months ago, the gaming and gambling specialist shut down two of its investment funds after critical newspaper articles triggered a run by investors.
PAC Capital’s offices on Macquarie Street in Sydney. Louise Kennerley
ASIC’s decision to issue a “no actions” letter to Mr Larcombe doesn’t mean the regulator has ceased its investigation into Mr Larcombe or PAC Capital, according to experts familiar with its procedures.
A source said Mr Larcombe had transferred personal assets into PAC Capital funds to improve returns for investors, an unusual but not illegal practice.
About 70 per cent of investors’ money has been returned to them by selling the funds’ shares. The rest is locked up in a private equity fund that owns part of a gambling website, Picklebet. Mr Larcombe is or has been Picklebet’s largest investor, according to company filings.
While Mr Larcombe has been criticised for investing clients’ money in his personal business, last month Picklebet said it raised $15 million from private investors based in Las Vegas.
The investment by Discerning Partners, which states on its website that it has connections to the US casino industry, values Picklebet at $105 million, according to a Picklebet press release.
Picklebet, which takes bets on horse racing, professional sports and computer games, has reported a 500 per cent increase in revenue over the past year. Mr Larcombe didn’t respond to a request for comment. Neither did Discerning Partners.
Picklebet is the largest investment by PAC Capital’s private equity fund. PAC Capital is looking for new investors to replace the existing investors, who are mostly individuals not legally considered sophisticated investors.
Mr Larcombe has given day-to-day control of PAC Capital to Harvey Kalman, a former executive at Melbourne-based Equity Trustees, which has legal oversight of PAC Capital’s investments.
“I have found nothing that has led me to be disturbed about anything, apart from a lack of resources for service providers to get things back up to speed,” Mr Kalman said on Friday.
Changes being made by Mr Kalman include merging funds, firing Boutique Capital, the trustee of PAC Capital’s wholesale funds, and subleasing office space at its offices on Macquarie Street, Sydney, where resignations have left it with four employees.
One of the last employees is Sebastian Lander, an investment analyst who has overseen a 1.3 per cent fall in an international “growth” fund since it began last April.
Last year, PAC Capital said it managed $500 million of assets. Much of the money came from individual investors in the Gippsland region of Victoria, where they were managed by a local accounting firm, DMG Partners.
DMG and its major shareholder, Count, have refused to discuss the relationship with PAC Capital, which has provided little information to investors about its problems, according to one source. There is no mention on its website about the decision to close the funds or other changes.
Its name and logo remain on the building’s roof.
A previous version of this article said Clayton Larcombe didn’t respond to a request for comment, which was incorrect.
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