KPMG launches consulting IPO

The company said that it was offering 112,482,000 shares of its common stock at a per share price of $18, valuing it at over $2bn (£1.3bn).

Morgan Stanley Dean Witter is the lead underwriter for the offering, co-managed by Goldman Sachs, JP Morgan, and Merrill Lynch.

It is anticipated KPMG Consulting, the first arm of a Big Five firm to make a public offering, will use the money raised as a war chest to buy the firm’s other consultancies around the world, including the UK office.

The flotation, which will be watched closely by other firms, had been put back several months due to volatile market conditions, leading to a cut in its original plans to raise $2.75bn.

But the news of the IPO was over-shadowed by a fall in Cisco System’s share price following the release of disappointing figures.

Cisco, the world’s largest internet specialist, owns 20% of the company.

In the UK, KPMG’s consulting practice is now run as a virtually autonomous organisation separate from the main accountancy practice, with its own management board. Last year the UK firm reported fee income of £272m for consultancy work.

However, in the US the consulting practice earned KPMG almost $2.4bn (£1.6bn).

A spokesman for KPMG in the UK said: ‘Overall our vision for KPMG UK remains unchanged – ie to be an integral part of a global, publicly-owned, management solutions consultancy.’

The success or otherwise of the IPO will be of particular interest to PricewaterhouseCoopers, which last year was set to sell its consultancy practice to Hewlett-Packard, only to see the deal fall through as HP’s share price was hit by turbulence in the technology market.

Ernst & Young has so far been the only large firm to sell its consultancy practice, completing a deal with Cap Gemini worldwide for $11bn.


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