PE/VC EXITS MOVE UP AHEAD OF UNICORN IPOs Rishi Sunak drawn into tax query on Murthy-funded Cloudtail
PE/VC-funded companies have entered a major exit phase with May being the second-best ever in terms of exit values. With some of the unicorns getting ready for IPOs, exit activity is expected to heat up in the coming months.
May 2021 recorded 18 exits worth $12 billion, almost 42 times the value of exits in May 2020 at $286 million and nearly four times the value in April 2021 at $2.7 billion.
Till May this year, there have been $19.3 billion worth exits and this is three times the total exit value of last year. Large well-funded corporations have been taking advantage of the current environment to consolidate businesses or acquire online capabilities to enhance the value proposition of their existing brick and mortar businesses, says a IVCA-EY report.
Going ahead, PE/VC funds will see a heightened activity. Several PE/VC-funded firms, including Paytm, Nykaa, and Policy Bazaar have announced IPO plans.
London, June 14: Cloudtail India Pvt Ltd— the online retailing joint venture of Infosys cofounder N. R. Narayana Murthy's firm and Amazon.com— faced a 5.5 million pounds demand, including interest and penalties, from tax authorities after it paid "meagre" taxes over the past four years, a media report said on Monday.
Amazon reportedly developed independent sellers such as Cloudtail, as 'special merchant' which enjoyed over 35 per cent of total sales on the platform until 2019.
While Murthy's Catamaran Ventures indirectly holds 76 per cent in Cloudtail and Amazon the remaining 24 per cent, the firm's two top posts— chief executive and finance director—were with the US retailer. Cloudtail's holding company, Prione is also run by a former Amazon manager, the report in The Guardian newspaper said.
The report said it is not known precisely what the tax dispute is about and the company said that it was contesting the bill, adding that since the "matter is sub judice, we are unable to comment any further .
Following the report, the office of UK chancellor of the exchequer Rishi Sunak, who is son-in-law of Murthy, was forced to comment.
The revelations come just days after Sunak led the G7 finance ministers' charge to agree to a global deal designed to make tech companies pay more tax.
"Reaching an international agreement on how large digital companies are taxed has been a priority for the chancellor since he took office," said a spokesperson for his UK Treasury office.
"The chancellor's consistent position has been that it matters where tax is paid, and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities. That is what our taxpayers would expect and is the right thing," the spokesperson said.
Sunak has been dubbed the UK's richest minister, largely as a result of his wife Akshata Murty's family wealth. The latest Guardian' report claims that an analysis of Cloudtail's accounts and activities shows that it is one of the largest sellers on Amazon.in, as part of a 7624 per cent joint venture with Amazon.
"The company has received a show cause notice in the current year from Directorate General of Goods and Service Tax Intelligence amounting to Rs 5,455 lakh (5.5 mn pound) along with interest and penalties for service tax-related matters, it quotes Cloudtail's most recent accounts as saying.
It claims that the annual report further reveals that Cloudtail which only sells via the Amazon platform paid Amazon fees of 95 million pounds last year, almost 10 times more than the Indian business reported in profit.