Investors who took control last year of prominent proptech firm, Asset Mapping, are being investigated by the Serious Fraud Office in relation to the £236m collapse of lending house London Capital & Finance.
Asset Mapping owes £3m to LCF, which is now in the hands of administrators Smith & Williamson. LCF was regulated by the Financial Conduct Authority but the mini-bonds that it sold to retirees were not. There are more than 11,000 people who invested in bonds with 8% promised returns who now face losing their money. LCF used the money raised to make loans to small businesses. Many of the companies that LCF made loans to were owned or co-owned by four men linked to LCF.
Two of the LCF men, Simon Hume-Kendall and Elten Barker, ultimately control Asset Mapping. The SFO has found that Hume-Kendall and Barker personally benefited from bondholders’ investments.
The £236m raised from bondholders was spent on helicopters, a stud farm, a Cornish holiday village and undeveloped resorts in Cape Verde and the Dominican Republic.
The criminal probe by the SFO, dubbed Operation Axite, has already led to the arrest of four men, including Hume-Kendall. The four were released without charge pending further investigation. Hume-Kendall, a Conseravtive party donor, and Barker have told administrators will repay what they owe.
The administrators said: “There are a number of highly suspicious transactions involving a small group of connected people which have led to large sums of the bondholders’ money ending up in their personal possession or control. We are pressing these people to return those funds to us for the benefit of the bondholders and failing this we will pursue those individuals, as appropriate, for recovery of those sums.”
Asset Mapping was one of the first movers into the building digitisation market, using sensors to improve monitoring of energy and environmental factors, when it was created in 2012 by former Johnson Controls design engineer Bill Clee.
The company’s clients and partners included Cisco, Intel, GSK, Manchester Metropolitan University, Cisco, Stanley Security, the Met Office.
In late 2015 Asset Mapping was part of the Manchester-based CityVerve consortium which won a £10m two-year Innovate UK contract to pilot IoT in cities.
Clee stepped away from Asset Mapping in mid-2018 when the new investors took control. He retains 50% of the business. There is no suggestion he was involved in any impropriety. Clee was replaced at the helm by Canadian oil and gas executive Saxton Monteith who represented the incoming investors.
The company is based in London and has a team of software developers in Poland. It is not clear how many staff remain. COO Michael Grant resigned as a director on 5 March. Clee and Grant declined to comment when contacted by PlaceTech. There was no response from anyone at Asset Mapping.
Joint administrators from Smith & Williamson said in their interim report of 25 March that Asset Mapping “will have difficulty repaying” the £3m it owes LCF.
Assessing its performance and ability to repay, the joint administrators said: “Whilst AM has had some success in penetrating its market it is still seriously underperforming and short of the capital needed to develop its product further and for marketing costs. Until further analysis is undertaken on this company, the administrators do not have sufficient knowledge to ascertain how and when this unsecured loan will be repaid.”
The administrators will now try and sell Asset Mapping to raise money to repay the retail investors and if unsuccessful will liquidate the company.