In a move that some will see as marking the end of a tempestuous investment experience, global management consultancy firm Accenture has reached an agreement to sell its venture and investment portfolio to CIBC World Markets, the investment and merchant banking arm of Toronto-based financial services company CIBC.
Accenture will retain a five per cent stake in the portfolio, which is comprised of approximately 80 early and mid-stage technology companies, with particular emphasis on software. Launched in 1999 the portfolio was intended to give the consulting firm equity upside exposure to the IT sector. The subsequent collapse in IT company valuations had a profound impact not only on the portfolio's value but also on the appetite the company had for such equity participation.
Accenture announced in March that it was planning to withdraw from venture capital investing in a move it said was designed to reduce volatility in the company’s future earnings. At the time, Accenture reported a loss on its investment portfolio in the second quarter ending 28 February 2002, including a write down of $212m related to the loss the company expected to incur upon selling the portfolio. In the previous quarter, ending 30 November 2001, the firm had already written down $90m against the value of the portfolio.
The terms of the sale have not been disclosed, although following the earlier charges taken by Accenture, the net book value of the venture and investment portfolio, is said to be approximately $95m. Accenture said that $43m of this was hedged.
Accenture also said in a statement that it does not expect to take any additional charges against earnings in connection with the transaction, which is expected to close by the end of 2002. Neither firm has been available for comment.