Asia Private Equity Review

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December 2009 Issue
In Brief

Oz Taxman’s A$678M Tax bill arising from sales proceeds of Myer’s IPO could have defining impacts on offshore structures commonly used by buyout investors Feature

Green Investment is a Must and is beginning to garner investors’ attention. Australia, China and India are the major hubs. The 4th part of the Green Agenda Special Report, along with case studies of two exemplary investments in alternative energy Special Report Case Study

DFIs are Entering New Frontiers and new markets to help develop long term direct investment Institutional Investors – Investments

Dubai’s Woes Unlikely to Affect Asia but is an enlightening exercise for institutions in the Arab Gulf Region Institutional Investors – Analysis

Deal Appetite for SE Asia market as evidenced by recent transaction movements as well as launch of funds for this economic region General Section – Investments

Controlled Assets are Sold with varying performance results General Section – Divestments

India Inc. Resumes Acquisition trail overseas, propelled by appreciating rupees India Corner – Analysis

IPO Expected to Boom in India as a long list of PE-backed companies in the IPO queue, sharply different from the mood for this year India Corner – Divestments

Content


Green Agenda
Investments
Case Study (1)
Case Study (2)

Institutional Corner
News
Investments
Analysis

General Section
News
Investments
Divestments

India Corner
News
Analysis
Investments
Divestments

Subscriber Weekly Summary
Summary
Index & Exchange Rates

 

A Taxing Precedent

Ten days, two major events. Their final outcome will define the exit performance of buyout investors, especially those who are non-resident in Australia.

On 2nd November, Myer Holdings Ltd. (‘Myer’), controlled by TPG, was listed and raised A$2.1 billion (US$1.8 billion). It was not only Australia’s biggest initial public offering since April 2007, but also TPG’s single-largest one-time exit in Asia. The global private equity firm clocked a capital return of over A$1.5 billion. But on 11th November, the Australian Taxation Office (‘ATO’) sought to freeze bank accounts to prevent the sales proceeds from Myer’s IPO being remitted to non-resident private equity investors. In this case, the applicable party referred to by the ATO is TPG. The injunctions, granted by the Victorian Supreme Court, were subsequently lifted when it came to light that there remained just A$48 in the referred banks accounts. The ATO also asserted that TPG owed Australia’s Commissioner of Taxation A$678 million in tax debt on the basis that TPG was immediately liable for tax upon its disposal of Myer.

The dramatic actions taken by the ATO to pursue the recovery of tax debt from non-resident private equity investors is the latest incident to illustrate that regulators have become increasingly vigilant about private equity investors’ activities, especially those in the buyout segment. The days in which the “private veil” was used to shield information regarded as non-public appear to be history.

So far, regulatory impediments have not been a major stumbling block to consummating transactions. Since 2006, there have been 67 deals known to have been foiled, with only 16% of them blocked by regulators.

A Double-Edged Sword
According to the listing prospectus of Myer, TPG held its interest in Australia’s iconic chain retail store through NB Swanston B.V., which was incorporated in the Netherlands. In PricewaterhouseCoopers’ recent newsletter (‘Newsletter’) which focused on the Myer IPO subject, it revealed that NB Swanston was in turn owned ....

This online issue of the Asia Private Equity Review is made available with abbreviated content. To read the full content together with more in-depth news, perspectives, and analysis, please subscribe or contact us to purchase back issues.

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