CIBC buys stake in about 80 technology firms

CIBC World Markets Corp. has bought a beleaguered investment portfolio from Accenture Ltd. that includes stakes in about 80 technology companies.

Accenture, one of the world's largest management consultants, announced in March that it was selling the portfolio after taking a $212-million (U.S.) writedown on the investments to $95-million. Of the $95-million, about $41-million is hedged.

At the time, Bermuda-based Accenture said it was cutting its losses and getting out of investing so that it could concentrate on its consulting business. Accenture was spun off from Arthur Andersen LLP in 2001.

Under the deal announced Tuesday, New York-based CIBC World Markets - the investment banking arm of Canadian Imperial Bank of Commerce - will buy a 95-per-cent stake in the portfolio and Accenture will hold the remainder. Accenture will also continue to develop relationships with the companies in the portfolio, the parties said.

The price was not disclosed. The portfolio includes investments in early and mid-stage technology companies mainly in the computer software sector.

It was created in 1999 through Palo Alto, Calif.-based Andersen Consulting Ventures, since renamed Accenture Technology Ventures. The company initially planned to invest up to $1-billion in high-tech companies with between $2-million and $30-million in sales. Some of its investments included Epylon Corp., a San Francisco-based on-line procurement company, and FuelQuest Inc., a Houston-based energy trading firm.

But like many similar funds, Accenture's technology business has soured in recent years. The value of the investments fell to $324.1-million in 2001 from $509.7-million in 2000.

Last year, the company said it was reviewing the portfolio for a possible writedown, but added that "any associated writeoff will not exceed $125-million." In fact, the writedown amounted to nearly twice that.

"This is not our mainstay business," Accenture spokeswoman Roxanne Taylor said Tuesday, referring to the portfolio. She added that the sale will help eliminate earnings volatility at Accenture.

CIBC World Markets officials said the deal helps it expand into the technology area. The acquisition "clearly demonstrates our commitment to the technology sector generally, and software specifically," managing director Marshall Heinberg said.

The merchant banking group has about $7.2-billion in investments.

Accenture is in the midst of a restructuring that includes pay cuts of up to 8 per cent for senior executives and 1,000 layoffs. The company has 75,000 employees, including 2,400 partners. Last year, chief executive officer Joe Forehand received $5.29-million in compensation.

Accenture has been hit hard by a slowdown in spending by companies on large technology projects. Accenture's share price has fallen more than 40 per cent this year. The shares closed Tuesday up 99 cents to $16.27 on the New York Stock Exchange.