PwC Australia in talks to spin off scandal-damaged units

SYDNEY, June 23 (Reuters) – PricewaterhouseCoopers Australia is looking to sell its government, education and healthcare practice to private equity firm Allegro Funds, according to a person familiar with the matter, as the firm battles fallout from a major scandal. .

The scandal, which first broke in January, centers on a former PwC tax partner who had been advising the federal government on laws to prevent corporate tax evasion and shared confidential information with colleagues who then used it to sell work to multinational companies.

While the scandal began in PwC’s tax practice, it has tainted the most lucrative government consulting business as a growing number of departments and organizations, including the Reserve Bank of Australiapause or review work with the “big four” professional services firm.

A term sheet has been drawn up for a possible deal, the Australian Financial Review said when it first reported the story on Friday.

The sale could include approximately 100 partners and 1,000 employees, or 10% of the firm, the AFR added. PwC Australia made A$3 billion ($2.01 billion) in revenue last fiscal year.

A spokesman said PwC does not comment on market speculation when asked for a response. Allegro Funds did not immediately respond to a request for comment. The person familiar with the sale plan could not be named as the information had not yet been made public.

Allegro Funds describes itself as a restructuring specialist with more than A$4 billion ($2.68 billion) under management.

PwC Australia interim chief executive Kristin Stubbins said last month the firm would “fence” its government consultancy business and appoint a separate board to consider “strategic options for the business.”

In a sign that the scandal is beginning to affect the private sector work of PwC, four major pension funds that manage approximately A$750 billion. froze work with the firm this month.

($1 = 1.4914 Australian dollars)

Reporting by Lewis Jackson; Edited by Lincoln Feast and Simon Cameron-Moore

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