Allegro buys PwC's Australia government consulting business

The divestment is part of a broader firefighting effort at PwC Australia that includes the appointment of a new CEO. Separating the public consulting business, which serves federal and state governments, from the firm's other operations in Australia is intended to ensure minimum disruption to clients.

"We have taken this step because it is the right thing to do for our public sector clients and to protect the jobs of the 1,750 talented people in our government business," said Justin Carroll, board chair of PwC Australia, in a statement.

"This transaction will result in the first pure-play, at scale, government business in the market. This was an extremely difficult decision, but we are determined to take all necessary steps to protect the jobs of our people and re-earn the trust of our stakeholders."

Government advisory services accounted for 20% of PwC Australia's overall revenue in the 12 months ended June 2023. The firm reported revenue of AUD 3bn in 2022. Its capabilities in the space cover justice and policy, infrastructure, defence, digital transformation, and health and wellbeing.

The tax leak scandal emerged last November when Australia's Tax Practitioners Board said it had terminated the registration of a Peter Collins, a PwC partner. Collins had advised the Australian Treasury on measures to crack down on tax avoidance by multinational corporations and then shared that information with other PwC personnel in Australia and overseas, violating confidentiality agreements.

"In sharing this confidential information, Mr Collins sought to assist existing and potential new clients of PwC to avoid the anti-avoidance tax laws to be introduced in 2016 – putting at risk AUD 180m per year of tax to be paid in Australia," a government inquiry held earlier this year was told.

"Further, 'Project North America' generated new income of at least AUD 2.5m for the first tranche of PwC's services in assisting clients to sidestep the new laws."

The inquiry noted that internal PwC emails received and published by the Senate Economics Legislation Committee demonstrated no regard for confidentiality obligations and a clear desire to monetise the information. The emails further illustrated an awareness that Collins' actions could be problematic for PwC if ever made public, yet "were supported and condoned within PwC."

The government said in May that it had referred the matter to federal prosecutors so that they could consider pursuing criminal action against Collins. PwC has stated that its clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.

Allegro is currently deploying its fourth fund, which closed on AUD 750m in May 2022, beating a target of AUD 600m. Recent activity includes a take-private of listed Australian law firm Slater & Gordon and the sale of Pizza Hut Australia following a turnaround effort that saw a doubling in network sales.

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• Topics
• Australasia
• Buyouts
• Advisory
• Restructuring
• Australia
• Allegro Funds
• PwC