Accenture is working on a potential $1.5bn sale of its operations in China as the world’s largest publicly traded IT consultancy looks to focus on its fastest-growing business and convince investors it can adapt to the AI boom. The company has hired JPMorgan to work on a strategic review of the China business after receiving unsolicited interest in the unit over the past year. The whole Greater China unit could be valued at up to $1.5bn, with the sale process likely to draw interest from private equity groups and a small cluster of strategic buyers.
Accenture may opt to retain a significant minority stake in the business to help ensure continuity for clients. There are no guarantees that the review will result in a transaction. The potential divestiture comes after Accenture shares whipsawed in recent months as investors debate whether it will be a winner or loser from AI.
Accenture is betting that companies will require more of its services to help with the rollout of the technology, while bearish investors argue AI will allow companies to replace consultants and bring in house the functions they have previously outsourced. Several western professional services firms including Mc Kinsey have scaled back in China amid tightening security regulations designed to keep sensitive information from leaving the country. The rules have forced firms into separating IT systems and limited the ability to generate synergies across borders.
Accenture did not respond to requests for comment. JPMorgan declined to comment. Accenture told investors on Wednesday that it expected top-line growth to remain subdued for the next two years before accelerating towards the end of the decade as demand for new AI services takes off in earnest.
The long-term guidance — and the fact that Accenture was willing to commit publicly to revenue forecasts despite the uncertainty — provided another leg up to the share price, which has surged 85 per cent from its June nadir. Full-year figures earlier this month beat Wall Street expectations after a stronger performance by both parts of its business — consulting and outsourced services. Proceeds from a sale of the China business could prove useful.
Accenture is also planning to reinvest some of the benefits of its own internal cost savings from AI by holding down prices for clients and making acquisitions that boost its AI service offerings. At the same time, it promised it would keep debt levels modest and committed to returning significant amounts of cash to shareholders in the form of share buybacks and increased dividends. Angie Park, chief financial officer, signalled that Accenture could raise capital through disposals in a brief remark late in the investor event.
She said the company had a record of “exiting businesses, offerings, countries, contracts that no longer meet our strategic or return thresholds”. Accenture’s Greater China operations include Taiwan, Hong Kong and mainland China. Its wider Asia-Pacific business generated roughly $10bn in revenues last year.
Source: Financial Times Companies · Summarized by HeadlinesBriefing