In March 2021, an official at Warrington Borough Council within the north of England listened to a pitch to put money into a business constructing 75 miles away in Birmingham. Warrington invested £10mn. The stake is now price £1.3mn.
The matchmaker for the troubled deal between the actual property agency behind the scheme M7 Real Estate and the native authority was Lee Robinson, a Monaco-based financier whose pursuits have turn out to be unusually entwined with the Labour-run council.
The 54-year-old former derivatives dealer was current at Warrington’s 2021 assembly with M7, had launched the 2 events, and was additionally an investor within the property outfit’s funds. The Birmingham constructing, known as Mailbox, final 12 months defaulted on a mortgage, threatening to wipe out the council’s stake.
The deal was simply one in all £120mn price of investments Warrington has made since 2017 which have hyperlinks to Robinson, who one council officer likened to star footballer Lionel Messi.
Those investments embrace a closely impaired £30mn stake in a challenger financial institution, greater than £40mn in property funds managed by M7 and an additional £47mn in often-opaque funding automobiles at Robinson’s personal agency.
Robinson’s relationship with Warrington is dealing with rising scrutiny from opposition councillors, who’ve struggled to totally perceive monetary dangers of the council’s dealings with him.
![Warrington and Birmingham locator map](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F34af9cd0-018f-11ef-a4ba-8556b2b2ec68-standard.png?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
“Conservative councillors, including myself, have been asking for relatively straightforward information about these investments for some time now,” stated Tory group chief Nigel Balding. He added they had been “usually fobbed off” by the council.
Warrington is a part of a swath of UK native authorities which have ploughed cash into speculative ventures over the previous decade by taking up enormous money owed in response to extreme centrally imposed funding cuts.
The city of 211,000 folks, sandwiched between Liverpool and Manchester, is by one measure essentially the most extremely leveraged council within the nation, in accordance with the newest authorities knowledge, with borrowings of practically £2bn. It has investments of about £1.5bn.
Warrington’s precarious funds drove the Department of Levelling Up, Housing and Communities to fee an exterior overview in 2023, which it has not launched to the general public.
The native authority’s auditor, Grant Thornton, has struggled to audit its books and solely this month accomplished the 2018-19 monetary 12 months. The agency concluded that the council didn’t have correct preparations to ship worth for cash for the second 12 months operating.
As Warrington’s debt has grown, so too have its hyperlinks with a financier primarily based 1,000 miles away on the French Riviera.
Among the Warrington investments that Grant Thornton has flagged as problematic is a stake within the holding firm of challenger financial institution Redwood, the place Robinson is a non-executive director and investor. The native authority’s funding in Redwood in 2017 was Warrington’s first introduction to Robinson, in accordance with the council.
Warrington’s stake in Redwood had been “materially overstated”, leading to a “significant impairment” that noticed a £30.4mn funding written down to simply £4.3mn by March 2019 after a third-party valuation, Grant Thornton stated this month. The council, in the meantime, stated it was “satisfied with the bank’s performance despite the ongoing economic challenges and depressed banking market”.
After Warrington invested in Redwood, it put £47mn into funds managed by Robinson’s funding agency Altana Wealth. Robinson arrange the agency in 2010 utilizing money from the sale of a stake in his earlier hedge fund to Goldman Sachs months earlier than Lehman Brothers collapsed in 2008.
The Australian-born Robinson started buying and selling derivatives within the early Nineties, first at funding banks after which at hedge funds. At the peak of the eurozone sovereign debt disaster, he was a distinguished commentator on the woes afflicting indebted nations all over the world.
Robinson has stated he based Altana “to do interesting things with higher returns”, after conventional markets grew to become more and more commoditised. His agency has since claimed to plan buying and selling methods for belongings starting from bitcoin to Bordeaux wine.
At a January audit assembly, Warrington’s finance officer Danny Mather defended Altana’s experience. Access to the ability of the agency’s “star fund managers” was “like having Lionel Messi or something on your football team”, Mather stated.
![Terraced houses in Warrington](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2Fff45e13f-a176-43ea-a24c-62cd71e2013c.jpg?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
Robinson and different Altana executives have met Warrington’s officers 17 occasions since 2018, in accordance with a Freedom of Information response, not together with conferences with Mather that the council refused to reveal.
Among the cash Warrington has invested with Robinson’s agency was £10mn into an Altana company bond fund in 2018. Tory councillors have argued it was not made clear to them that the fund invested in junk-rated debt.
The council has since withdrawn the funding, however retains £37mn in different Altana funds, lots of which Warrington merely describes as “managed accounts” with little to no element on the underlying investments.
Robinson informed the Financial Times that Altana was unable to touch upon “any client or their investments” as it’s “legally bound by client confidentiality”.
Warrington additionally established a three way partnership with Altana in 2019 to put money into “projects with long-lasting social impact”.
Warrington took a 49 per cent stake, made a £20mn funding within the Altana Social Impact Fund, and launched the funding alternative to a number of different native authorities corresponding to Wirral, in Merseyside.
Last November, Warrington council’s audit committee was informed that the fund was anticipated to supply a 6-8 per cent annual return. Wirral informed the FT in March that its funding thus far had returned simply 0.6 per cent.
The fund this 12 months agreed handy again a bit of traders’ cash after failing to deploy the entire capital it raised within the allotted time. Warrington’s newest monetary figures present that it has not suffered losses on its £47mn of Altana investments.
But the Birmingham property deal is essentially the most seen instance of how Warrington’s different dealings with Robinson have at occasions led to losses.
Since 2020, Warrington has invested greater than £40mn with M7, together with £10mn within the Birmingham Mailbox constructing and the remaining in different property funds managed by the London-based actual property agency.
Warrington started these investments in 2020 after an introduction to M7 by Robinson, who can be an investor within the agency’s funds, in accordance with an individual near M7. Robinson didn’t touch upon whether or not he was an investor in M7’s funds, whereas M7 declined to touch upon the matter, citing shopper confidentiality.
In paperwork filed with US securities regulators, M7 listed Robinson as a “marketer” for a number of of its funds, together with one which Warrington invested in centered on retail warehouses.
![The Mailbox building in Birmingham:](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2Fb2d88a6f-a4c1-43a4-a4e8-188b83fc0b1f.jpg?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
Warrington confirmed to the FT that “initial contact with M7 was made via Mr Robinson”, however stated it had “received assurances from Mr Robinson that he is not a marketeer for any M7 funds”.
It added that the March 2021 assembly with then-finance officer Julie Hall had been “made and arranged” by M7’s then-chair Richard Croft.
“Mr Robinson did not present and was there in his own private capacity as a potential future investor,” it added. The council stated in response to a FOI request it had no notes, agenda gadgets or minutes for the assembly.
Robinson informed the FT he had “never pitched Mailbox to anybody”, including that he was not a marketer for M7 and had “never pitched any investment to anyone other than Altana investments”.
After the FT despatched him a duplicate of M7’s regulatory filings, Robinson stated he was “surprised” to see his identify on the shape. He stated M7 “will correct and resubmit” the shape.
M7 informed the FT that Robinson launched the agency to Warrington “but was not involved in the subsequent marketing of any specific investment vehicles”. It added that the US submitting in query specified that “introducers” ought to be listed within the “marketer” part.
“Having spoken to Mr Robinson, we are taking specific legal advice [ . . .] and will make any corrections if deemed appropriate,” M7 stated.
Mailbox seems to be set to trigger one other problem for Warrington: a slumping property valuation triggered a default by Mailbox on a £103mn mortgage secured in opposition to the constructing in April 2023.
Warrington invested within the constructing by way of an funding belief that was listed on a specialist property trade. In September, Mailbox introduced that the trade was shutting down, making Warrington’s funding an unlisted asset and tougher to promote.
A November replace by the council’s finance officers to Warrington’s audit committee made no point out of the default and continued to forecast a constructive return on its funding.
A report back to the identical committee earlier this month famous Mailbox’s default and delisting. It additionally disclosed the property’s valuation had fallen to simply £113mn on the finish of final 12 months from £181mn at itemizing in 2021.
Warrington’s report stated the property was now being marketed to new consumers however that this might trigger a “large impairment to the council”. It added that an “alternative restructuring option” was additionally being thought-about.
Warrington informed the FT that Mailbox “continues to perform at record levels of rent and occupancy”. The council added its different M7 investments had “performed very well”.