The consulting arm of Big Five auditing company KPMG International said it is now aiming to sell 354.6 million shares instead of the 367.1 million shares projected in its proposed offering, according to a filing last Wednesday with the Securities and Exchange Commission.
KPMG Consulting, which filed in May for its IPO with intentions of raising $1 billion, still plans to debut on the Nasdaq at a price between $6.75 and $8.75 per share.
The move to decrease the number of shares comes as the overall market has gone sour for consulting companies, particularly those whose expertise rests heavily on e-commerce. In recent months, several companies, including Scient, iXL Enterprises, and others that help clients with Web development, design and strategy, have hit hard times as the bulk of the dot-com clients they once served run out of cash to spend on consulting services.
Consulting companies that once wowed Wall Street are struggling to win back their star status and are working to shift their focus to gain larger, more lucrative consulting engagements with Fortune 500 clients.
Meanwhile, KPMG Consulting and other giant services companies including Electronic Data Systems and IBM Global Services have scrambled to beef up their dot-com expertise by developing e-commerce practices and other Internet initiatives. Over the past year, KPMG Consulting and other Big Five management consultancies have also had to deal with plans to split from their auditing sides to resolve conflicts of interest.
The SEC for some time has said that a privately held auditing firm should not provide business consulting to its clients, prompting KPMG Consulting to move toward an IPO. Rival Ernst & Young recently sold its consulting unit to professional services firm Cap Gemini. In August, Andersen Consulting, which will soon begin operating under its new name, Accenture, formally separated from accounting parent Arthur Andersen. Deloitte & Touche is considering its options, as is PricewaterhouseCoopers after a failed attempt at an acquisition by Hewlett-Packard.
KPMG Consulting, which plans to trade under the ticker symbol "KCIN," has yet to disclose a date for its Nasdaq debut.
The consulting company, based in McLean, Va., said that immediately after its IPO, the accounting parent and its respective partners will collectively own no more than 19.9 percent of its common stock.
The company in the filing said it expects to use approximately $215.4 million of the proceeds from the IPO to repurchase stock from Cisco Systems, which invested $1 billion in KPMG Consulting last year.
If there is strong demand for KPMG Consulting stock, chief underwriter Morgan Stanley Dean Witter has an option to purchase 53.2 million additional shares.