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Advisory Unit of KPMG Plans $1-Billion IPO

May 06, 2000|From Bloomberg News

KPMG Consulting Inc. filed Friday for a $1-billion initial public offering that would break new ground for efforts by the world's biggest accounting firms to branch into more-profitable work advising companies about their businesses and technology.

KPMG Consulting, the advisory business of accounting firm KPMG, is based in McLean, Va., among the cluster of high-technology businesses in Washington's northern Virginia suburbs. It focuses on Internet and electronic-commerce consulting and systems integration.

KPMG Consulting's plan to sell stock for the first time, filed with the Securities and Exchange Commission, has drawn scrutiny from federal regulators concerned about potential conflicts of interest.

The SEC's chief accountant last year had raised concern that KPMG's audit independence could be jeopardized if, for example, audit clients owned stock in the publicly traded consulting business.

A KPMG spokesman wouldn't comment specifically on efforts to resolve the SEC's concerns. "Independence is a cornerstone of our audit business," George Ledwith said.

KPMG Consulting has an alliance with Cisco Systems Inc., a San Jose-based networking giant. The world's No. 1 supplier of computer networking products invested $1 billion in KPMG Consulting in December in exchange for 5 million shares of the company's Series A preferred stock.

For the year ending June 30, 1999, KPMG Consulting had income before partner distributions and benefits of $218.2 million on revenue of $1.9 billion. For the comparable period a year earlier, those figures were $92.6 million of income on revenue of $1.4 billion.

The number of shares to be sold in the consulting business's IPO and their price will be disclosed later.

The firm hired Morgan Stanley Dean Witter as an underwriter for the stock sale, the filing said. KPMG Consulting plans to trade on Nasdaq under the symbol KCIN.

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