The Irish partners in KPMG will pocket up to £40 million (€50.6 million) following the decision of the accountancy firm's international consultancy business to go ahead with its stalled stock market flotation.
KPMG Consulting re-started the marketing of its initial public offering last week and hopes to raise $2.5 billion (€2.67 billion). The company would not comment on the timing of the IPO but has suggested previously that it could come within weeks of the start of marketing roadshows.
Although the 45 partners in the Irish practice of KPMG sold the Irish consulting business to KPMG Consulting Inc, the US parent, last September they have yet to cash in on the deal. The partners were paid in a mixture of shares and loan notes in the US company, the value of which will be unlocked by the flotation.
The price paid for the Irish business was not disclosed but registration documents filed with the Securities and Exchange Commission in the US put a value of £40 million on it. The managing partner of the firm is Mr Jerome Kennedy and other well known partners include Mr Alex Burns - who supervises the National Lottery draw - and Mr Donall Gannon and Mr Pat O'Brien in the tax department.
KPMG plans to offer 112 million shares at between $16 and $18 per share with the aim of raising in the region of $2.5 billion. The partners in the accountancy practice worldwide - including the Irish partners - will own around 20 per cent of the floated consultancy firm. Cisco Systems, the Internet technology company will own in the region of 10 per cent and the management of the consultancy firm roughly another 20 per cent. The rest of the shares will be held by new investors.
All the existing staff of the consultancy arm will get share options in the flotation and this includes the 160 employees in Ireland. The chairman of the Irish operation is Mr John Condon and the two managing directors are Mr Paul Toner and Mr Gordon Wilkinson.
All three were partners in the Irish practice of KPMG prior to the sale of the Irish consultancy business. The three are being allocated shares as part of the flotation.
KPMG's decision to split off and float its consultancy arm follows pressure from US regulators on all the larger accountancy firms to either sell or demerge their consultancy operations because of conflict of interest issues. The SEC has introduced tough new laws that prevent accounting firms from offering certain types of consultancy to their audit clients.
Arthur Andersen responded by spinning its consultancy firm off as Accenture and Pricewaterhouse-Coopers looked at selling its consultancy arm to Hewlett-Packard but the talks were abandoned last year.
KPMG had originally planned to float its consultancy business last November but put the process on hold because of stock market volatility, particularly in technology stocks.
