London Capital & Finance and the Chinese investment fantasist

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Articles dug up from the archives of local papers have revealed that before London Capital and Finance invested £21 million in the Waterside Villages resort in Cornwall, the same resort was the subject of a planned £30 million investment which was to form part of a £250 million investment in UK tourism by China.

Chinese company Sinofortone and London Group plc, which was owned by Elten Barker and Simon Hume-Kendall, signed a Memorandum of Understanding in 2015. From a Cornwall Live story from October 2017:

The plan was to purchase of the Lakeview Country Club and rename it Waterside Luxury Village as a “first step with other locations to be announced”.

The development was set to include 36 luxurious villas, a state-of-the-art visitor centre, spa, dining facilities and sports venues. There would have also been a five star 105-bedroom hotel, a wide variety of outdoor pursuits, Mandarin-speaking receptionists and tour guides.

Sinofortone was headed by Peter Zhang. From 2015 to 2016 Sinofortone announced a dizzying array of expensive investments into the UK, which included:

  • an investment of £2 billion into Welsh biomass and food stations
  • the aforementioned £250m investment into holiday villages
  • £100m into a Paramount theme park in Kent
  • £10bn into housing and transport in Scotland
  • London’s Crossrail 2 rail line
  • A proposed science park in Cambridge
  • Regeneration scheme in Huddersfield and Stoke-on-Trent
  • A reported £700m takeover bid for Liverpool football club

None of these plans came to anything. Sir Richard Heygate, who was a co-director of Sinofortone’s UK company, later said that Sinofortone’s proposed investments were “all bollocks” and “Peter [Zhang] is a nice guy but he believed he could create a private vehicle for raising money without having any capital himself, and I just thought was impossible – a crazy idea”. Sinofortone’s website disappeared some time ago.

Peter-Zhang-Scott-Mann
L to R: Andy Thomson (London Capital & Finance CEO), Simon Hume-Kendall, Scott Mann (MP for North Cornwall) and Peter Zhang (Sinofortone CEO)

The only investment Sinofortone did manage to make was to buy a pub in Cornwall called the Plough, where Chinese Premier Xi Jinping and then Prime Minister David Cameron were photographed sharing a pint. The purchase was funded by a £2 million loan from the Royal Bank of Scotland. Whether RBS ever got their money back is not known.

Zhang claimed that he would capitalise on the photo op by building 50-100 replicas of the Cornish watering hole in China. This plan also appears to have come to nothing.

After the Sinofortone deal fell through, London Capital and Finance invested £21 million of money that actually existed in the Cornish resort instead, via Prime Resort Development Limited, which in turn lent to Waterside Villages Limited and Waterside Support Limited. Waterside Villages Limited.

As part of the transactions relating to Waterside, multi-million pound sums went into the personal accounts of Simon Hume-Kendall, Elten Barker, Andy Thomson and trusts/interests of Spencer Golding, according to the LCF administrators’ report.

The imaginary Sinofortone deal was by this time ancient history, and no blame attaches to LCF or its borrowers for the shenanigans of Zhang. It does however provide interesting context into how LCF investors’ money ended up in Cornwall.

The administrators continue in their attempts to establish how much money, if any, can be recovered from the Waterside resort. According to their report, the administrators “are very concerned that the management of Waterside, which is well aware that the LCF Bondholders are depending on the value of the LCF borrowers and sub-borrowers for their repayment, has made no real efforts to prove to the administrators either the value of the Waterside business or of the security provided to secure the repayment of the debt”.

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