LV to be run from tax haven after £530m deal: Private equity predator registers shell company in Jersey
Insurer LV will be owned by a firm based in an offshore tax haven if private equity sharks secure a £530million takeover next month.
LV bosses have agreed to sell the 178-year-old mutual to Bain Capital – but the deal needs the backing of members.
It has now emerged that the American buyout firm, which is based in Boston, has registered a shell company in Jersey to carry out the acquisition.
LV bosses have agreed to sell the 178-year-old mutual to Bain Capital – but the deal needs the backing of members
The vehicle, called BCC Blake Bidco Limited, was registered in December last year leading MPs to question whether LV will maintain the values of a mutual and pay as much tax in the UK.
Private equity firms often use complex webs of offshore companies in the Isle of Man, Jersey and the Cayman Islands to take advantage of lower taxation and disclosure requirements.
The revelation caused Labour MP Gareth Thomas, the chairman of the all-party parliamentary group for mutuals, to write to Bain’s frontman, Matt Popoli, to demand he reveal who its backers are.
Thomas told the Daily Mail: ‘Setting the company up offshore, rather than basing it at one of their UK offices, doesn’t sit well with the idea that Bain wants to maintain mutual values.
‘It calls into question whether the new owners really intend to maintain offices in Hitchin, Exeter or Bournemouth, and what levels of taxation the firm will pay in the future.’
Sources close to Bain said the company will still be a UK tax resident and pay corporation tax on all profits.
In die brief, seen by the Mail, Thomas demanded that Bain release the names of the prospective board and pledge not to use the buyout as a launch pad to buy more mutuals in the UK.
He also questioned whether Alison Hutchinson, a board member of LV, has been approached about the possibility of demutualising the Yorkshire Building Society, where she is currently vice chairman. LV was founded in 1843 to allow Liverpool’s poor to avoid the indignity of a pauper’s funeral.
Members have a little over two weeks to vote on the deal, which has drawn opposition from across Westminster and the City.
Bain has been criticised for offering just £100 to LV’s policyholders and owners, while failing to make guarantees on jobs.
Bain Capital said: ‘We will take time to consider and fully reply to Gareth Thomas in due course. We do note, egter, that the letter contains a number of wrong and misleading assumptions.’