BusinessCompany NewsStamp duty opens up PLCs to private equity takeovers

Stamp duty opens up PLCs to private equity takeovers

Report by Oxera finds that stamp duty hits share prices, and makes it easier for private equity to launch takeovers

Stamp duty on public company shares makes it easier for private equity firms
to launch takeovers, by suppressing share valuations, a report
by
Oxera
claims.

The report, commissioned by several City bodies including the Association of
British Insurers, found that share values were suppressed by as much as 8.5%
because of stamp duty taxation on the sale of shares.

But the effect of the cost of equity for private equity firms is negligible.

An occupational pension scheme at retirement has its value reduced by as much
as 2.4% because of stamp duty, and it also hits stakeholder pensions and child
trust funds.

Although stamp duty generates £3bn per annum for the government, abolishing
the tax would increase UK GDP to increase tax take up to £4bn, and see FTSE350
companies reinvest an extra £6.4bn.

The report was commissioned by the ABI, City of London Corporation,
Investment Management Association and London Stock Exchange.

Further reading:

Hedge funds lower debt levels

Iris put up for sale for £250m

Private equity seeks new model to cut
advisers’ fees

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