‘Esports Hedge Fund’ Manager Scrutinized by Australian Media

Credit: PAC Capital

Multiple reports published by Australian business newspaper the Australian Financial Review (AFR) this week have called into question the validity of some claims made publicly by Australian businessman Clayton Larcombe and the company he founded, PAC Capital. Multiple reports from AFR this week raise questions about Larcombe’s highly publicized professional background and education, and about the operation of PAC Capital’s funds and investments. 

Questions about Larcombe—described by some Australian publications in the past as “one of Australia’s most influential esports businessmen” and PAC Capital—called the “only hedge fund devoted to esports and gaming,” are of particular interest to the esports industry, given that it has invested in such companies as Bayes Esports, Talon Esports, and esports betting site Picklebet, among others. 

PAC Capital’s Esports and Esports-Adjacent Investments

Early in 2022, PAC Capital launched a private fund focused on esports, gaming, virtual reality, metaverse, and adjacent themes with a targeted $50M USD fund size of which a third has been committed by March 2022. The fund (named PAC Private 1 initially, now marketed as PAC Global Esports Fund) was set up as a combination of funds and direct private investments. PAC Global Esports co-invested in funds managed by Bitkraft, Manifest, F7 Ventures, Boston Seed Capital, DRIVE by DraftKings, and Darling Ventures. Private investments were made in Pickletbet, Oddin, Sportsbook2022, Talon, Crypto League, and Bayes.

According to Crunchbase data and a Bayes Esports press release on Feb. 6, PAC Capital led a Series A4 investment round (amount not disclosed), bringing the total amount raised in 2022 to €9M. Larcombe was also appointed Chairman of the Board, replacing BITKRAFT Ventures Founder Jens Hilgers. 

According to a press release dated Nov. 21, 2021, Talon Esports raised $5M USD in a Series A funding round led by Animoca Brands, with participation from PAC Capital, Hana Digital Transformation Fund, HZL Capital, AK Partners, Token Bay Capital, Foxmont Capital Partners, Arete Capital Asia, BlackPine, Yieldly, and other family offices. The investment round valued the Hong Kong-based esports organization at $16MUSD, according to PAC Capital.

According to investor documents issued by PAC Capital, the fund invested in Odin.gg at an entry price of $22M USD.

On the same day that Bayes announced its Series A4 funding round, Forbes Australia published a story detailing the deal and some of Larcombe’s backstory on how he started the $500M AUD fund he manages through PAC Capital and his investments in sports and esports betting site, Picklebet.com.

According to his recollection at the time of the article, Larcombe met a guy on a golf course sometime in 2018, who asked if he would manage some money for him. That unnamed person gave him $1M AUD to invest: “Two months later, he gave me $4 million, then $45 million about a year later. By that time, I was managing $100 million for five families in Queensland,” he told Forbes Australia. “That was just over three years ago. We now have $500 million under management. It’s been an explosive run.” 

Part of that fund was built from an acquisition in the fall of 2022: On Oct. 31, 2022, AFR reported that, following “a hotly contested auction,” PAC Capital acquired Clearwater Portfolio Management and $250M AUD worth of assets. At the time, Larcombe said that he would direct some of it towards gaming and esports.

Also according to the Forbes Australia story, at around the same time that he was launching PAC Capital, Larcombe had a chance encounter with an unnamed person who was associated in some way with Picklebet, a Brisbane-based bookmaker for sports and esports wagering. That person asked him if he would help the company raise some seed capital. “They had no money, but a great idea and a very lucrative license,” Larcombe told Forbes Australia. “I personally seeded the company. I wouldn’t do that again, but I was single back then.” Larcombe claims that he gave them $1M AUD and ended up “taking 50% of the business.”

Larcombe’s Resume Challenged

Prior to stories being published in AFR, Larcombe’s LinkedIn profile noted that he held bachelor’s degree in applied economics from Sydney University, was a share trader at Morgan Stanley in Hong Kong between 2009 and 2010, and a share trader at JPMorgan in Hong Kong in 2011 and 2012. But an AFR report disputes many of those public-facing items on Larcombe’s LinkedIn resume.

For starters, Sydney University has not offered a “bachelor’s degree in applied economics” in the last 23 years, a spokesman told the publication. His claim that he worked as a share trader at Morgan Stanley in Hong Kong between 2009 – 2010 appears to not be supported by the Securities and Futures Commission of Hong Kong, who instead lists him as a licensed securities dealer at MS from May 2011 – January 2012. Finally, his LinkedIn profile recently noted that he worked as a share trader at JPMorgan in Hong Kong in 2011 and 2012, but there was no record of him being licensed to work at JPM—records do indicate he did work with CLSA in 2010 and 2011.

All of those entries have been removed from Larcombe’s LinkedIn profile, which now only lists his time at PAC Capital beginning in 2018. The claim about his “Bachelor of Applied Economics from the University of Sydney” still appears, as of this writing, on the website of Clearwater Portfolio Management, which was acquired by the firm last year (screenshot of the entry taken Aug. 2, 2023 at 10:00 a.m ET).

Questions Around $500M AUD Fund, Picklebet

Much of AFR’s reporting this week questions the makeup of PAC Capital’s proported $500M AUD fund. In a report published on Monday, AFR claims that “Larcombe’s retail feeder fund listed $4.5 million in net assets” a year ago, which is now worth $55M AUD, according to another report by Morningstar. The Clearwater Portfolio Management acquisition in late-2022 brought that number up to roughly $293M AUD, according to AFR. A spokesperson for Larcombe told the publication that $90M AUD of the assets are held in “wholesale funds and a venture capital fund known as PAC Private 1,” which comes to $380M AUD, but the spokesman would only say that the remainder of those assets are in “private funds.”  

The AFR report on Monday also alleges that, in January 2021, Larcombe moved his Picklebet shares (he told Forbes Australia he owned 50% of the company) to a “little-known funds management support business called Boutique Capital,” which, it claims, rents its financial services license to professional investors for a flat fee—including PAC Capital. 

Boutique Capital is currently listed as owning 47% of Picklebet. In April 2022, PAC Capital announced that it had made an investment for an undisclosed amount (that announcement has been removed from the company’s website) as well, though the seller was not identified. According to corporate filings by Picklebet, it raised $13M AUD in April at a valuation of $70M AUD. One of the investors was Boutique Capital, who purchased $10.6M AUD in shares from an undisclosed party or parties. On June 10, 2022, it sold $3M AUD in shares to a company called Halkin Private Capital. 

The Esports Advocate could not independently verify some details of this story because PAC Capital has removed a number of press releases, reports, employee/executive profiles, and other data from its website; for example the “Private Investment Fund Quarterly Update” for Q4 2022 returns a 404 error because it is no longer on the website. 

TEA reached out to Oddin.gg, Pickelbet, PAC Capital, Clayton Larcombe, Bayes Esports, and Talon Esports prior to the publication of this story and will update with additional information when and if it becomes available.

A spokesperson for Larcombe told AFR that much of its reporting was false or inaccurate and that it could face legal action: “We note that there have been several untrue and inaccurate statements made in your articles to date, and warn you that any further publications of untrue, incorrect or defamatory information may be pursued through legal avenues,” he wrote in an email to AFR.

Tobias Seck contributed to this report.