Private Equity’s Irish Adventure: Has Tax Avoidance Put Limited Partners Outside Their Comfort Zone?
February 27, 2017
Oaktree Capital Management’s funding of Mars Capital Ireland, an “orphaned” Section 110 SPV, provides an example of the headline risk that tax avoidance may expose limited partners to.
The full report is available here.
- In the wake of the financial crisis, the Irish government took steps to rescue its largest banks, including the creation of the National Asset Management Agency (NAMA) which was tasked with acquiring property-related loans from distressed banks.
- The government’s rescue measures – and subsequent mortgage portfolio sales to private investors – have received considerable criticism within the Irish media and political arena.
- Funds managed by Oaktree provided debt capital to Mars Capital Ireland, a special purpose vehicle that benefitted from Section 110 tax provisions, to fund the acquisition of residential mortgage loans from NAMA through the IBRC liquidation.
- Mars Capital Ireland is a bankruptcy remote vehicle own by three charitable trusts that are linked to the Matheson Foundation, the corporate philanthropy initiative of Matheson, a global corporate law firm with headquarters in Dublin.
- After deducting all interest expenses, Mars Capital Ireland reported a profit before tax margin of approximately 0.007% in 2015; the company reported taxes of €250.