Chinese investors spun by fugitive Michael Gu now | Term Deposits

The multibillion-dollar Salter Brothers asset management empire was seeded with money from Chinese investors steered into a fund run by Michael Gu, the Lamborghini-driving alleged fraudster who fled the nation after his property business collapsed owing more than $60 million.

Documents and investor testimony obtained by The Australian Financial Review show that the foundations of Salter Brothers’ $4 billion portfolio may be traced back to the Atlas Capital SIV Fund – a 2015 vehicle co-founded by Gu and Paul Salter to draw rich Chinese nationals beneath a scheme that supplied visas in return for main investments in Australia.

Michael Gu left Australia after the collapse of his iProsperity business in 2020. He was noticed in Hong Kong earlier this 12 months.

Gu fled abroad after the collapse of his iProsperity Group and allegations he used investor money to fund his lavish life-style. He is now residing overtly in China, and associates who requested anonymity to talk freely say he usually hosts poker nights at luxurious motels such because the Rosewood Guangzhou and is raising capital for ventures in Hong Kong and Singapore.

Salter Brothers has erased Gu from all of its promotional materials, and is making ready to record on the ASX. The company owns a string of properties together with luxurious motels in Sydney and Melbourne which can be being rebranded Regent Hotel & Resorts. It can be redeveloping a resort on the Gold Coast.

An data memorandum circulated by Atlas Capital to Chinese investors in 2017, nonetheless, listed Salter Brothers managing director Paul Salter because the firm’s chief govt. Gu is listed as director of investor relations. The 98-page Atlas Capital doc outlines choices overseen by Salter Brothers starting from term deposits to enterprise capital. Atlas Capital was marketed to Chinese businessmen via Austar Immigration, in line with purchasers who requested anonymity to talk freely.

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According to paperwork and investor contracts, Austar was a key middleman sourcing high-net-worth people from mainland China eager to immigrate to Australia. Under the Significant Investor Visa scheme, which ended final 12 months, residency was fast-tracked for rich immigrants who agreed to funnel not less than $5 million into eligible companies.

Austar would in the end direct some of that money into investment automobiles run by Salter Brothers together with a property and resort fund vehicle often known as the Series Ok (Yield Asset) Fund. Materials circulated by Salter Brothers show that fund targets a 6 per cent annual return, with the firm accumulating a 2 per cent management charge and a 25 per cent efficiency charge.

ASX itemizing
The unit price for Salter Brothers’ Series Ok fund – which owns the InterContinental and Crowne Plaza in Melbourne, in addition to the Hyatt Regency in Brisbane and several other different motels – has dropped from 98¢ in July 2015 to 83¢, in line with updates despatched to investors in December. Redemptions have additionally been frozen, and distributions suspended.

“The Salter Brothers Series K Fund’s largest investment is the Salter Brothers Hotel Group,” the replace reads. “International inbound travel continued to recover throughout the year, albeit at a rate lower than that forecast by Tourism Research Australia. Domestic tourism, on the other hand, faced headwinds probably from high cost-of-living pressures.”

“We understood that COVID made things difficult for the funds, but it has now been nine years,” one investor who requested anonymity stated. “We are now all trapped. We came with such good expectations.”

Salter Brothers, which now has nearly 5000 resort rooms in its properties, is working in direction of an ASX itemizing for a $2.5 billion hospitality portfolio that will be one of the most important such automobiles within the Asia-Pacific.

It has expanded aggressively not too long ago, buying a portfolio of Bannisters motels that embrace eating places operated by movie star chef Rick Stein. Earlier this 12 months, it unsuccessfully proposed a $940 million refinancing of Star Entertainment which might have left it controlling the on line casino giant.

The Australian Financial Review just isn’t suggesting Salter Brothers was concerned in Gu’s alleged fraud, which solely grew to become clear when iProsperity failed.

Gu fled the nation after the collapse of iProsperity, which directors blamed on his “potential misuse of investor funds” and “potential improper conduct”. The report stated $290,000 was used to partially fund the acquisition of a Lamborghini Urus on May 13, simply weeks earlier than iProsperity collapsed.

“The company appears to have used funds raised from investors and deemed to be held on trust in a manner which was inappropriate and in breach of certain agreements between investors and the company,” iProsperity’s directors at KPMG wrote to collectors in 2020.

At the time, the Financial Review reported that Gu was a common at high-roller rooms in Macau, The Star in Sydney and the Sands in Singapore, forking out on extravagant meals and bottles of wine that price $3000.

Salter Brothers and Austar didn’t reply to requests for remark.

Gu had in depth ties with the Salter Brothers business, nonetheless. Liquidator studies show an entity linked to Gu – often known as Magic Jade – acquired a convertible observe price $1.87 million as partial reimbursement of an difficulty by iProsperity earlier than it collapsed. One of Magic Jade’s administrators, Fuyin Fan, can be a director of Salter Brothers entities, in line with paperwork filed with the company regulator.

Paul Salter and Fuyin Fan aren’t accused of any wrongdoing.

A Hong Kong-incorporated Atlas Capital entity listed SB Investments (Hong Kong), the place Paul Salter is a director, as a shareholder alongside Elephant Tribe Capital (Hong Kong) Co, the place Gu is a director. Atlas Capital’s Hong Kong-incorporated business has since been struck off the register.

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