Sweden's EQT said to be in race for Grant Thornton UK

11th Sep 2024 12:13

(Sharecast News) - Swedish buyout firm EQT has reportedly joined a queue of buyout firms exploring the purchase of a big stake in the UK operations of accountancy firm Grant Thornton.

According to Sky News, EQT, which is in the process of acquiring the computer games producer Keywords Studios, submitted an offer to Grant Thornton's advisers ahead of a deadline earlier this week.

Stockholm-based EQT joins a list of bidders which includes Carlyle, Cinven, CVC Capital Partners and Permira.

Nordic Capital is also said to have considered an offer.

Sky said a deal could value Grant Thornton's UK arm at between £1bn and £2bn, according to industry sources.

CVC's involvement in the auction is of particular interest because the firm also owns Teneo, a professional services firm spanning public relations, political advice and financial restructuring, including company administrations and liquidations.

The latter part of the business was acquired from Deloitte, the professional services giant, in 2021 and was partly borne out by the growing issue of conflicts within large accountants between their audit and consulting arms.

CVC has owned Teneo since 2019 and is expected to pursue an exit from the business in the next couple of years.

Audit scandals at companies such as BHS and Carillion fuelled public and political pressure for the separation of accountants' audit and consulting operations.

In 2022, the Financial Reporting Council fined Grant Thornton £1.3m for "serious failings" in its audit of Sports Direct, the sportswear empire founded by Mike Ashley and now known as Frasers Group.

It was also handed a £2.3m penalty the year before for demonstrating a "serious lack of competence" in relation to its work on Patisserie Holdings, the owner of the collapsed cafe chain Patisserie Valerie.

Since then, Grant Thornton has slashed the number of so-called public interest entity (PIEs) audit clients, a category which includes banks, insurers and other companies deemed to be of particular importance.

A spokesperson for Grant Thornton UK LLP previously said: "As all businesses do, we continually evaluate the external business and economic landscape and explore various avenues that will drive growth for our firm.

"This enables us to make informed decisions about what's best for our people, our clients and our firm."

Grant Thornton UK has about 200 partners, who would have a decisive vote on any transaction.

The firm's US entity has already concluded a deal with New Mountain Capital, another private equity group, to sell a majority stake.

EQT declined to comment to Sky.