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What was the role of NZ government in Xero’s rapid growth?

Posted by te2ataria on February 4, 2017

Sent by a reader

Peter Theil screwed NZ taxpayers without even kissing them, thanks to incompetent/corrupt government!

Peter Thiel, the gay German/American billionaire, pocketed tens of millions of dollars from a joint venture funded by New Zealand taxpayers, while his publicly funded investment partner almost suffered a loss, said a report.

“The partnering of Thiel’s Valar Ventures and the Government-owned New Zealand Venture Investment Fund (NZVIF) was launched by minister Steven Joyce in March 2012,” said a report.

Joyce said at the time the venture was “part of the Government’s comprehensive business growth agenda”, but a Herald investigation has discovered the arrangement was quietly ended in October when Thiel activated a generous buyback option allowing him and his private partners to claim all profits from the venture by cheaply buying out his public co-investor.

A Wall St analyst told the Weekend Herald the clause left the Government facing a “horrendous risk-return proposition” that had no place in agreements between commercial parties.

Thiel netted at least $30 million after investing  just $6.8m, while NZVIF received just $10.2m after having earlier invested $9m.

“If a professional investor signed this deal, they would be the butt of their colleagues’ jokes all the way out the door,” the analyst told Herald.

Despite claims at the time of launch that Valar Ventures would invest $40m in local technology companies, it ended up committing only $18m — the bulk of which went towards accumulating shares in the NZX-listed cloud accountancy software company Xero.

Xero share price soared from $3 to as high as $45 in a short period of time, making the Xero-dominated Valar Ventures extremely valuable. “By mid-2016 its stash of Xero shares was worth $43m, representing the vast bulk of the fund’s value.”

What’s missing from the Herald report is the role of NZ government in helping to make Xero so valuable! Did they award the accounting software company large government contracts?

More…

Other News in Drips…

Three bodies found in separate missing cases

Body found in Sandfly Bay, Dunedin
While the formal identification process is yet to identify the body, it is thought to be connected to the search for the missing diver from yesterday afternoon.
http://www.police.govt.nz/news/release/update-body-found-sandfly-bay-dunedin

Body found at Karaka Bay, Wellington
Police have recovered a body that was found at Karaka Bay this morning, Saturday 4 February 2017.
http://www.police.govt.nz/news/release/body-found-karaka-bay-wellington

Missing man’s body recovered in Westland
Police have found the body of a tramper who was reported missing on Friday. He was overdue from a day-long tramp in the Jackson Bay area of South Westland.
http://www.stuff.co.nz/national/89102215/Missing-mans-body-recovered-in-Westland

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