A large PE house was purchasing an Italian real estate portfolio.

During the buyer’s due diligence process it highlighted the risk of Italian withholding tax being due on certain historic interest and dividend payments.  This was due to a lack of documentation and also potentially a challenge on whether the holding company structure had sufficient substance. As a consequence the buyer was seeking a price chip from the seller for the potential amounts of withholding tax due.  

The seller was resisting the price chip and threatened the buyer that it would go back to market if this issue persisted.

Notwithstanding the higher risk rating, given the fairly low limit we were able to offer an insurance solution. As a consequence, the buyer no longer required a price chip and the seller was happy to complete the transaction.