The island is all anyone appears to want to discuss at the seminar to promote his Mayfair Platinum funds.

Mayfair Platinum and its predecessor, IPO Wealth, have emerged from obscurity after a media blitz with the Dunk Island purchase and planned investment on nearby Mission Beach. It attracted so much coverage that Mawhinney’s outfit was put “on the map”.

“We had all the major news outlets there. That broadcast, and the media that followed the next couple of weeks, reached 392 million people globally,” he told the audience.

Rush for yield

Mawhinney had pitched his products at finance commentator Peter Switzer’s seminars, and Switzer’s wife and Switzer chief executive Maureen Jordan was formerly on the advisory board of IPO Wealth. In June, Mawhinney launched the Mayfair Platinum brand and recruited ING chief economist Mark Cliffe to its advisory board.

He's been interviewed by Alan Kohler, fascinated by his Dunk Island play. He’s taken out dozens of full-page advertisements in several newspapers, including The Australian Financial Review. He's even used Instagram influencers.


But the marketing blitz of new operators worries some.

“The rush for yield in an extremely low interest rate environment is clearly creating all sorts of distortions and excessive risk-taking by investors,” investment consultant Dominic McCormick says. “Mayfair Platinum is one of the more obvious examples.”

Last week, Mawhinney took to the road to meet investors in Australia’s major cities. The Australian Financial Review paid the $47 entry fee to attend the Sydney leg at the Hyatt Regency.

He was followed by a film crew that he hopes will create a Netflix-worthy documentary on the rise of his investment firm.

During a two-hour sales pitch, Mawhinney told a spellbound audience, mostly senior citizens, how the banks weren’t telling them the full truth about the government guarantee on deposits, how investing in India was an essential opportunity, and how Warren Buffett inspired him.

“Once upon a time, we considered that our financial planners were the fountains of truth,” he said. “Once upon a time, India was considered to be a slum ... a place where a lot of people would learn to meditate.

“My how times have changed.”

On each seat were glossy booklets about Mayfair Platinum products and how to apply to invest in them.


“I don't want to dwell on the products. My team are in suits and ties at the back of the room that can help,” he said as his pitch passed the planned 11 o'clock finishing time.

What exactly is Mawhinney selling? An alternative to bank deposits that are now paying conservative savers next to nothing. Instead, Mayfair Platinum offers between 3.65 per cent for a three-month term and 6.45 per cent for five years.

Across three Mayfair-related offerings, Mawhinney says he’s raised about $180 million from investors and has $500 million of assets under management.

The reason he’s advertising so hard, he says, is because he already has "a home for over $US5 billion over the next five years”.

Slam Dunk

And while he stresses these investments carry more risk than money in the bank, even those comparisons are questionable.

That’s because unlike a bank that raises safe deposits to lend out to businesses and consumers, Mawhinney is using the cheap funds to back his own speculative investments.

Latest accounts for the IPO Wealth Fund show its sole investment is an $86 million loan to a related Mayfair 101 entity.


That borrower then stumps the money “into a range of private equity investments”, according to the accounts. There’s no more visibility on performance of those investments other than that the fund received $5.8 million in interest.

Unfortunately I think in five years' time we will see permanent loss of capital for those members of our community who can least afford it. — Peeyush Gupta, NAB director

The pamphlet for Mayfair Platinum’s fixed income product says the funds raised are used for ongoing “capital management” or “investment purposes” across the Mayfair 101 group.

The deed poll governing Mayfair’s fixed income notes allow it to temporarily capitalise unpaid interest payments and delay repayment if the company has liquidity concerns.

Mayfair 101’s own pronouncements show it is making speculative plays on everything from an Indian accounting software firm to payments start-ups, along with the Dunk Island transformation.

It’s not on the brochures, but Mawhinney is not hiding from the fact that fund investors get their modest interest while his Mayfair 101 reaps all the upside if high-risk plays pay off.

“Our investors get paid first. It’s exactly what you are getting at the bank – just two to three times more,” he told a potential investor in the audience – one of the few not asking about Dunk Island.

So does the return justify the risk?


Mawhinney doesn’t directly answer the question, but maintains that Mayfair Platinum, for instance, is diversified and provides a “full discourse” of potential pitfalls.

But investment experts say there is little disclosure about the portfolio of companies that Mayfair investors are effectively lending against, so weighing up the risk is difficult.

By way of comparison, a one-year investment account with non-bank lender La Trobe pays 5.05 per cent. That is backed by 5000 mortgages with an average loan-to-value ratio of 62 per cent.

An ASX-listed fund managed by global private equity titan KKR targets a yield of 4 to 6 per cent. That fund invests in 180 corporate bonds and loans, of which 85 per cent are secured by assets.

McCormick adds that the risk-taking “may not end badly for investors if one or more private equity or corporate transaction winners could provide enough of a buffer to keep paying interest and repay the loan capital as required”.

Tim McGowen, of Informed Investor, has been vocal in his concerns about the IPO Wealth and Mayfair Platinum offerings.

Road to Mayfair

There is “no transparency around their portfolio”, he says. “This is what happens when a marketing executive tries to become an investment professional,” he says.


Mawhinney’s background includes a lengthy stint at ASX-listed Reeltime Media, an IT and digital marketing outfit.

He was chief operating officer, a consultant and eventually chief executive – but the job proved controversial in some respects. AFR Weekend can reveal he was personally castigated for “evasive conduct” by the Fair Work Commission in his time there.

Reeltime was in trouble by 2014, when Mawhinney, on behalf of the company, sacked a senior staffer for allegedly failing to meet sales targets.

But Fair Work labelled the firing as “substantively and procedurally unfair” – the staffer testified to receiving no performance warnings, for instance. It found the staffer, who had continued to work for Reeltime even when it couldn’t pay its office rental, had instead been dismissed because of the severe liabilities befalling the company.

Mawhinney and the company did not appear in hearings, but he had supplied information of a “confusing and unsatisfactory nature”, Fair Work found. It ruled that his actions and that of the associated companies were “dismissive and disrespectful” of the federal body. The staffer was awarded $37,500.

Mawhinney did not respond to Fair Work’s criticisms; instead he maintained to AFR Weekend the sacking had been valid and he had acted as a whistleblower to root out malfeasance by another key Reeltime executive.

Mawhinney’s resume is not confined to Reeltime. The 35-year-old, born in Fremantle, has law and commerce degrees from the University of Western Australia, and leadership or advisory roles at companies such as restaurant payments service Liven, which Mayfair 101 backs.

Then there’s Mayfair 101 itself, which he started in 2009 and now encompasses a “global investment-banking style ecosystem” headquartered in London.


The group's corporate structure is a spaghetti bowl of shareholdings, funds and loans, in Australia and the UK. A UK Mayfair 101 entity, for example, is the ultimate holder of shares in investment software outfit OktoWealth.

Some of the touted portfolio companies have struggled or are bleeding red ink. Its India-focused accounting software play, Accloud, started in 2015, earned zero revenue last year and had almost $26 million in accumulated losses, according to Accloud's latest accounts. In March, Mayfair 101 pledged to invest up to $44 million in the business.

Mayfair’s light disclosures didn’t seem to trouble many people at the seminar, and it is under no legal obligation to provide information that might make a more informed investment.

That is because it offers a “wholesale product” available to sophisticated investors, who in theory don't require as much information.

In order to qualify, an investor must have net assets of $2.5 million or more, or generate an income of $250,000 for their accountant to then sign them off as “sophisticated”.

But Mawhinney explained there is another way – by investing “half a million or more, you are automatically eligible to make an investment”.

Sophistication

He also maintains Mayfair 101 “operates in a fully compliant manner with the relevant regulations and is prudent with how it deploys investor capital”.


McCormick doubts whether all of Mayfair Platinum’s investors are truly sophisticated enough to assess the financial risks, and whether they can afford to lose their money. Each investor’s circumstances and risk appetite are different.

But if you read wholesale client comments that Mayfair Platinum refers to, it’s pretty reassuring. The flattery includes testimonials from a widow who just sold the family home and was “all alone and had no idea what to do”. Other reviewers pointed out the free wine. One boasted he was the “least educated in my family. I had a lot of critics, but I went with my gut”.

Still, McCormick says Mayfair 101’s growth may one day call into question the regulator’s role in monitoring wholesale investors and whether rules need to be changed.

The whole situation highlights the role of disclosure, and of financial commentators in vetting products. Most of all, it reveals how mistrust of banks has become a powerful marketing meme.

National Australia Bank director Peeyush Gupta – speaking generally – was quoted at a conference last week worrying about an explosion of advertising from new operators.

“Unfortunately, I think in five years’ time we will see permanent loss of capital for those members of our community who can least afford it,” he said. “Anything we've seen from this royal commission will pale by comparison.”

But it is precisely the royal commission that Mawhinney is capitalising on.

“Look at all of you – you're potentially self selecting what you might invest in,” Mawhinney told the Sydney audience. “We don't need to ring up someone else to tell us where to steer our money.”