AFR Feb 2020 - Rocketboots was Ensogo. This looks a bit suss?
Why does Patrick Grove's zombie e-commerce company still exist?

Aaron PatrickFeb 26, 2020 – 5.31pm

Some companies just won't die.

In June, 2016, a Groupon imitator founded by one of Australia's hottest young tech entrepreneurs, Patrick Grove, shut down, beaten by faster rivals, disappointed clients, and annoyed consumers. Grove departed, although he left a trusted aide on the three-man board.

Patrick Grove in 2018. Charles Pertwee

Once described as one of "Asia's most promising e-commerce firms," Ensogo had raised $54 million the year before. It had been public less than three years.

Failure happens, and Grove quickly launched a new business – an Asian take on Netflix. The business, iFlix, is apparently taking off, helping Grove place 105th on The Australian Financial Review's Rich List last year, where he nudges close to billionaire status.

Meanwhile, something unusual has been happening at Ensogo. A company with no business, almost no staff, and several thousand frustrated investors is spending millions winding up subsidiaries in Asia that it disowned almost four years ago.

When Ensogo stopped operating websites that offered discount cosmetics, electronics and other consumer products, including BeeCrazy.nk and Dealmates.com, the company had between $7 million and $5 million in cash, according to company filings.

At the time, the board told investors it was working with liquidators "to complete the winding-up processes as efficiently as possible" and "no longer intends to provide financial support to" its businesses in Hong Kong, Singapore, Malaysia and elsewhere.

Money going out

The years ticked by. Nothing happened. Promises that Ensogo would be wound up, or sold for use as a back-door share market listing, didn't eventuate.

Meanwhile, millions were spent to close about a dozen companies across South-East Asia. At the end of 2016 the company had $5.2 million in cash. A year later it had $4.03 million, and then $3.02 million. In June, there was $2.5 million cash left. Almost all the money was spent on administrators, according to company reports.

"They declared they were no longer responsible for their Asian subsidiaries, which is amusing, because how can they do that and just cut them loose, but at the same time appoint voluntary administrators for those companies?" said one shareholder, who didn't want to be named.

A sale of the parent company – and return of the remaining cash to shareholders – was held out as a possibility as late as last year. In the 2018 annual report, the directors said they were "actively evaluating various options... in relation to reinstatement of its securities to trading, including potential reverse takeover opportunities".

Now, with the fourth birthday of the company's failure a few months away, one of the directors who took over after the Grove era, Mark Licciardo, says a deal to resolve the company's fate is imminent.

"It's as big a frustration to me as anyone else," the former company secretary at road group Transurban says. "It is getting close to conclusion now."

Unexpectedly complicated

Licciardo, whose firm, Merton Corporate Services, provides company secretarial services on a contract basis, says it was unexpectedly complicated shutting companies in multiple countries with different laws.

"It just takes an extraordinary amount of time," he says. "I was surprised how long myself."

EY, the main administrator of the foreign entities, according to Licciardo, declined to comment.

Asked why Ensogo chose to spend millions on administrators in Asia when it had apparently severed financial links with the businesses in 2016, Licciardo said he wasn't sure and would need to check. He didn't call back.

Ensogo's 2019 accounts are being finalised now, and it is unclear how much, if any, money is left.

Among those left with the almost-worthless shares are Grove, whose Catcha Media Group has about 14 per cent, and a Hong Kong-based fund called Ward Ferry Management, which has 10 per cent. Neither would comment on the failed investment.

AFR Feb 2020