Private equity cashes in on B&M as former Tesco boss Leahy takes advantage of tax haven
Former Tesco boss Sir Terry Leahy is cashing in on the sale of shares in discount retailer B&M through a secretive deal where his profits are funneled through a tax haven.
After leaving troubled Tesco, Leahy took on a new role as chairman of B&M, a bargain-basement bazaar known as the ‘new Woolworths’.
He led the company’s float on the stock exchange in June last year where shares were priced at 270p each, valuing the company at £3billion. Since then the shares have gone up by 17 per cent to 315p.
It is not known how many shares Leahy personally owns in the store chain because they are tucked away in a fund run by US private equity group Clayton Dubilier & Rice.
That fund CD&R FundVIII is based in the tax haven of the Cayman Islands.
It means multi-millionaire Leahy, who acts as an adviser to CD&R stands to benefit from advantageous tax treatment.
Clayton Dubililer & Rice yesterday cashed in a chunk of shares for £384million. It made the sale shortly after the end of a banning clause forbidding it from disposing of shares for 180 days after the float.
The private equity firm still holds a stake of just over 17 per cent.
B&M has proved a cash cow for all those involved. The three Arora brothers made £380m by selling their controlling interest to CD&R ahead of the float.
They now hold a 27 per cent stake worth around £756million.
Shares fell 5p to 315p.
Tax expert Richard Murphy said: ‘If Terry Leahy was ever a man of the people it was a long time ago.
‘The time has come when the sale of UK assets should give rise to a UK tax liability.
‘The government has dealt with this in regard to houses and now they have to tackle it with regard to private equity.’
