Thursday 12 December 2019

Maloney's Balderton Capital named in Luxembourg tax files

A Luxembourg road sign is seen at the border between Belgium and Luxembourg (REUTERS/Yves Herman)
A Luxembourg road sign is seen at the border between Belgium and Luxembourg (REUTERS/Yves Herman)
John Mulligan

John Mulligan

Balderton Capital, the venture capital firm established by Irishman Barry Maloney, has been named as one of the companies that used complicated Luxembourg corporate structures to lower its tax liability.

London-based Balderton is one of Europe's biggest venture capital funds, and manages $2.2bn (€1.7bn) worth of investments in dozens of technology firms.

It was founded by Mr Maloney in 2000. He is now a partner at the business. He was chief executive of Irish mobile phone company Esat Digifone between 1995 and 2000.

Mr Maloney made about €60m from the sale of Esat in 2000 to BT.

Documents released by the International Consortium of Investigative Journalists (ICIJ) this week show that Balderton Capital secured approval in Luxembourg for a tax scheme related to its fourth fund, which raised about $430m (€346m) in 2008.

In 2010, it secured a tax ruling in Luxembourg related to that fund.

It set up a Luxembourg platform through which the fund's current and future European investments would be held.

Balderton told the Luxembourg authorities that the bulk of the capital it raises comes from university endowments, charitable foundations and pension funds.

It told the authorities that the initial investments it intended to make using money from its fourth fund included injections into Australian firm Ewise Systems, France-based Talend, and German games firm Wooga.

All of the schemes in Luxembourg revealed by the ICIJ are completely legal, but they've again raised concerns about how companies around the world use complicated structures to help lower their tax bills.

The ICIJ released documentation related to Irish dairy group Glanbia this week, which showed it used legal structures to funnel close to €1bn through Luxembourg to lower its group corporate tax rate. Firms from Ikea to Heinz and Pepsi have done likewise.

A highly successful venture capital fund, Balderton has invested in high-profile companies such as gambling group Betfair, Irish software firm Openet, social media site Bebo (which was sold to AOL in 2008 for $850m), and Setanta Sports. It has also invested in controversial companies such as UK payday lender Wonga.

In April this year, Balderton raised a new $305m investment fund that will target stakes in European technology firms. It has also used Luxembourg vehicles to reduce its tax liability related to that fund.

Irish Independent

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