Nearly a quarter of Brewdog’s shares are held in the Cayman Islands, it has been revealed.
The beer giant was launched by Fraserburgh duo James Watt and Martin Dickie in 2007 and has built up a global following mainly through its “equity for punks” Crowdfunding initiatives which have attracted more than 145,000 small shareholders.
But today it is has emerged that almost a quarter of its shares are held by obscure partnerships in notorious tax haven the Cayman Islands – and that it has at least one very un-punk big backer: pro-Brexit Conservative donor Jon Moynihan, who served as chairman of Vote Leave’s finance committee.
Scotland on Sunday today revealed 23.25% of the firm’s shares are owned by two exempted limited partnerships, who hold “liquidation preference” – meaning if the beer company goes bust, they would get their money back first.
The entities, TSG7 A AIV II (Cayman) LP, and TSG7 A Lassies and Laddies (Cayman) LP, hold a total of 891,383 ordinary A shares in Brewdog PLC.
Between them, they also hold a further 16,160,949 preferred C shares in the company.
‘It’s about as punk as croquet’
The partnerships are controlled by TSG Consumer Partners, a US private equity firm with more than £6.4billion in assets.
And with the beer firm under fire recently from former employees who described a “toxic working culture”, TSG has swooped in further – with its managing director, Blythe Jack now the inaugural chairman of Brewdog’s board.
Alex Cobham, chief executive of the Tax Justice Network, the advocacy group that campaigns for a fairer tax system, said: “This is a disappointing, but sadly common story – companies whose approach to tax havens is entirely at odds with their projected image.
“Having major investors using Cayman as a conduit is certainly antisocial, but it’s about as punk as croquet.
“Cayman ranks worst in the world in our Financial Secrecy Index, and second worst on the Corporate Tax Haven Index. It is a jurisdiction overwhelmingly dedicated to facilitating anonymous ownership, profit shifting and the avoidance of tax on capital gains that would otherwise arise in the places where the real business happens.”
Asked how the company could reconcile its ethos with the fact such a large proportion of its stock was held by the Cayman entities, a Brewdog spokeswoman said she “can only comment about BrewDog’s own tax obligations and activity”.
It is not only offshore firms who are among the biggest individual shareholders in the firm, whose headquarters are now in Ellon.
A total of 7,142 class A shares are held by Mr Moynihan, a long-time Conservative donor who gave £100,000 to the party in the run-up to the 2019 general election.
The pro-Brexit venture capitalist and private investor was also chairman of Vote Leave’s finance committee and heads the executive board for the right-wing think-tank Initiative for Free Trade.
BrewDog recently purchased a brewery in Berlin for easier distribution across the EU, a decision which was largely based on Brexit.
Punks with Purpose
Mr Watt last week promised an independent review of Brewdog will be carried out after former employees banded together to accuse bosses of “lies, hypocrisy and deceit” and of fostering fear in their employees.
The group, who call themselves Punks with Purpose, claimed the company had a “rotten culture”.
An open letter, to BrewDog. pic.twitter.com/xEd3B83qot
— Punks With Purpose (@PunksWPurpose) June 9, 2021
The founders have since issued an apology, in which they said they were committed to doing better and vowed to take action into doing so.
Mr Watt later said he took “100%” of the responsibility for the letter.
He vowed an independent review of the workings of the firm would be undertaken, and said staff encouraged to take part in an anonymous survey.