In March 2021, an official at Warrington Borough Council in the north of England listened to a pitch to invest in a commercial building 75 miles away in Birmingham. Warrington invested £10mn. The stake is now worth £1.3mn.
The matchmaker for the troubled deal between the real estate firm behind the scheme M7 Real Estate and the local authority was Lee Robinson, a Monaco-based financier whose interests have become unusually entwined with the Labour-run council.
The 54-year-old former derivatives trader was present at Warrington’s 2021 meeting with M7, had introduced the two parties, and was also an investor in the property outfit’s funds. The Birmingham building, called Mailbox, last year defaulted on a loan, threatening to wipe out the council’s stake.
The deal was just one of £120mn worth of investments Warrington has made since 2017 that have links to Robinson, who one council officer likened to star footballer Lionel Messi.
Those investments include a heavily impaired £30mn stake in a challenger bank, more than £40mn in property funds managed by M7 and a further £47mn in often-opaque investment vehicles at Robinson’s own firm.
Robinson’s relationship with Warrington is facing growing scrutiny from opposition councillors, who have struggled to fully understand the financial risks of the council’s dealings with him.
“Conservative councillors, including myself, have been asking for relatively straightforward information about these investments for some time now,” said Tory group leader Nigel Balding. He added they were “usually fobbed off” by the council.
Warrington is part of a swath of UK local authorities that have ploughed money into speculative ventures over the past decade by taking on huge debts in response to severe centrally imposed funding cuts.
The town of 211,000 people, sandwiched between Liverpool and Manchester, is by one measure the most highly leveraged council in the country, according to the most recent government data, with borrowings of nearly £2bn. It has investments of about £1.5bn.
Warrington’s precarious finances drove the Department of Levelling Up, Housing and Communities to commission an external review in 2023, which it has not released to the public.
The local authority’s auditor, Grant Thornton, has struggled to audit its books and only this month completed the 2018-19 financial year. The firm concluded that the council did not have proper arrangements to deliver value for money for the second year running.
As Warrington’s debt has grown, so too have its links with a financier based 1,000 miles away on the French Riviera.
Among the Warrington investments that Grant Thornton has flagged as problematic is a stake in the holding company of challenger bank Redwood, where Robinson is a non-executive director and investor. The local authority’s investment in Redwood in 2017 was Warrington’s first introduction to Robinson, according to the council.
Warrington’s stake in Redwood had been “materially overstated”, resulting in a “significant impairment” that saw a £30.4mn investment written down to just £4.3mn by March 2019 after a third-party valuation, Grant Thornton said this month. The council, meanwhile, said 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 investment firm Altana Wealth. Robinson set up the firm in 2010 using cash from the sale of a stake in his previous hedge fund to Goldman Sachs months before Lehman Brothers collapsed in 2008.
The Australian-born Robinson began trading derivatives in the early 1990s, first at investment banks and then at hedge funds. At the height of the eurozone sovereign debt crisis, he was a prominent commentator on the woes afflicting indebted nations around the world.
Robinson has said he founded Altana “to do interesting things with higher returns”, after traditional markets became increasingly commoditised. His firm has since claimed to devise trading strategies for assets ranging from bitcoin to Bordeaux wine.
At a January audit meeting, Warrington’s finance officer Danny Mather defended Altana’s expertise. Access to the skill of the firm’s “star fund managers” was “like having Lionel Messi or something on your football team”, Mather said.
Robinson and other Altana executives have met Warrington’s officers 17 times since 2018, according to a Freedom of Information response, not including meetings with Mather that the council refused to disclose.
Among the money Warrington has invested with Robinson’s firm was £10mn into an Altana corporate 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 investment, but retains £37mn in other Altana funds, many of which Warrington simply describes as “managed accounts” with little to no detail on the underlying investments.
Robinson told the Financial Times that Altana was unable to comment on “any client or their investments” as it is “legally bound by client confidentiality”.
Warrington also established a joint venture with Altana in 2019 to invest in “projects with long-lasting social impact”.
Warrington took a 49 per cent stake, made a £20mn investment in the Altana Social Impact Fund, and introduced the investment opportunity to several other local authorities such as Wirral, in Merseyside.
Last November, Warrington council’s audit committee was told that the fund was expected to provide a 6-8 per cent annual return. Wirral told the FT in March that its investment to date had returned just 0.6 per cent.
The fund this year agreed to hand back a chunk of investors’ money after failing to deploy all of the capital it raised in the allotted time. Warrington’s latest financial figures show that it has not suffered losses on its £47mn of Altana investments.
But the Birmingham property deal is the most visible example of how Warrington’s other dealings with Robinson have at times led to losses.
Since 2020, Warrington has invested more than £40mn with M7, including £10mn in the Birmingham Mailbox building and the rest in other property funds managed by the London-based real estate firm.
Warrington began these investments in 2020 after an introduction to M7 by Robinson, who is also an investor in the firm’s funds, according to a person close to M7. Robinson did not comment on whether he was an investor in M7’s funds, while M7 declined to comment on the matter, citing client confidentiality.
In documents filed with US securities regulators, M7 listed Robinson as a “marketer” for several of its funds, including one that Warrington invested in focused on retail warehouses.
Warrington confirmed to the FT that “initial contact with M7 was made via Mr Robinson”, but said it had “received assurances from Mr Robinson that he is not a marketeer for any M7 funds”.
It added that the March 2021 meeting 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 said in response to a FOI request it had no notes, agenda items or minutes for the meeting.
Robinson told the FT he had “never pitched Mailbox to anybody”, adding that he was not a marketer for M7 and had “never pitched any investment to anyone other than Altana investments”.
After the FT sent him a copy of M7’s regulatory filings, Robinson said he was “surprised” to see his name on the form. He said M7 “will correct and resubmit” the form.
M7 told the FT that Robinson introduced the firm to Warrington “but was not involved in the subsequent marketing of any specific investment vehicles”. It added that the US filing in question specified that “introducers” should be listed in the “marketer” section.
“Having spoken to Mr Robinson, we are taking specific legal advice [ . . .] and will make any corrections if deemed appropriate,” M7 said.
Mailbox looks set to cause another difficulty for Warrington: a slumping property valuation triggered a default by Mailbox on a £103mn loan secured against the building in April 2023.
Warrington invested in the building through an investment trust that was listed on a specialist property exchange. In September, Mailbox announced that the exchange was shutting down, making Warrington’s investment an unlisted asset and harder to sell.
A November update by the council’s finance officers to Warrington’s audit committee made no mention of the default and continued to forecast a positive return on its investment.
A report to the same committee earlier this month noted Mailbox’s default and delisting. It also disclosed the property’s valuation had fallen to just £113mn at the end of last year from £181mn at listing in 2021.
Warrington’s report said the property was now being marketed to new buyers but that this would cause a “large impairment to the council”. It added that an “alternative restructuring option” was also being considered.
Warrington told the FT that Mailbox “continues to perform at record levels of rent and occupancy”. The council added its other M7 investments had “performed very well”.