Global management consulting and technology services firm, Accenture will cease its venture activity following a loss on investments including a charge of $212 million. The firm will reposition its venture and investment portfolio and aggregate its minority ownership interests into a single subsidiary which it has put up for sale. Accenture plans to retain a small minority stake in the subsidiary.
The decision follows preliminary second quarter results which reveal net income before minority interest, excluding write-downs, at around $240 million. Including the write-downs, the figure falls to between $23 million and $33 million.
Accenture has employed an investment bank and is currently in discussions with potential buyers. The portfolio, which comprises around 70 investments, is expected to have a net book value of about $95 million of which $43 million is hedged. The firm hopes to complete a sale by the end of the year.
“We thought it was best to cut our losses and get out so that we could focus on our core business which is IT and management consulting,” said an Accenture spokesperson. Going forward, the group will continue to make investments and will accept equity and equity-linked securities using guidelines intended to eliminate volatility, but it will discontinue venture capital investing.
Accenture Technology Ventures has European offices in London, Dusseldorf and Stockholm. When Accenture formed Accenture Technology Ventures in 1999 it had allocated some $1 billion to be invested over five years, but the amount invested was significantly less in a modest portfolio of investments, revealed the spokesperson. He added that the investments had generated some good returns and had also served Accenture well by providing an insight into new technologies. “There are a lot of entrepreneurs out there and every now and then you strike gold,” he said. Unfortunately for Accenture the failures outweighed the successes.