Aus court dismisses PEP suit vs Adamantem

Pacific Equity Partners alleged that Adamantem Capital founders Anthony Kerwick and Rob Koczkar have breached confidentiality agreements with their former employer while raising money for their new fund.

The New South Wales Supreme Court has dismissed a lawsuit filed by Australian buyout giant Pacific Equity Partners against former managing directors Anthony Kerwick and Rob Koczkar, over a case of potential breach of contract.

In a ruling on Thursday, the court ordered PEP’s legal action dismissed and that it pay the defendant’s legal fees. According to the court document, “PEP has failed to demonstrate to a sufficient level of plausibility that it ‘may’ have a valid claim for breach of the employment agreements to entitle it to preliminary discovery in support of such a claim.”

Kerwick, Koczkar and Adamantem Capital – the spin-out firm founded by the pair in July 2016 – are named as the three defendants in the action.

PEP filed a claim in April this year alleging that the Adamantem team might have been using confidential information from their time at PEP in order to promote Adamantem’s fund and requested the marketing materials used in its fundraising.

Adamantem launched its debut fund in October 2016 with a A$600 million ($450 million; €400 million) target. Towards the end of 2016, an Australian Financial Review article reported the firm reached around A$300 million for its first close. The said article referred to the founders’ background at PEP and quoted them on a number of investments while at the firm including Veda Group, Energy Developments and Spotless Group.

Following the publication of the article, PEP became concerned confidential information including figures for the performance of PEP’s previous funds including multiple of money and internal rate of return, were revealed in Adamantem’s investor prospectus and its dealings with the media. PEP sought access to Adamantem’s documents but the defendants denied they misused any confidential information. They also did not provide the documents sought and suggested information on the transactions are made available in the public domain by third parties.

Commenting on the judgment, Kerwick, said: “This action has been completely baseless. It’s a matter of public record that Rob and I are established private equity executives who are well known in the market. Private equity deals are reported by the press, by public market investors in private equity and by subscriber databases.”

“Since our departure from PEP was announced almost five years ago, we have acted appropriately at all times and pursued other interests in business and philanthropy before establishing our own fund, in a different segment of the market, late last year,” he added.

Meanwhile a PEP spokesman said: “PEP is disappointed with the result and will consider its options in order to protect its rights under established contracts between the parties,” without commenting further.

PEP, founded in 1998, is the largest private equity firm in Australia by assets under management. It is currently deploying PEP V, which closed on A$2.1 billion in September 2015.