KPMG Consulting Enters Uncertain Market
Shares were priced at $18.00, opened at $20.44 and shot up to $24+ on fairly heavy volume on the first day of trading.
Analysts expected the trading to be negatively affected by Cisco Systems, which owns 20% of the consultancy, who saw its shares fall by 13% earlier this week after posting results below expectations. But the market responded differently, embracing the launch of the first - and likely not the last - accounting related consulting offering.
KPMG Consulting's Nasdaq flotation comes five months after receiving regulatory approval for the move, due to uncertainty over market conditions.
Chief underwriter Morgan Stanley Dean Witter sold 117m shares in KPMG Consulting (KCIN) at the top price of $18, valuing the firm at $2.2bn.
The firm expects to use approximately $400 million of the proceeds to repurchase from Cisco preferred stock that will not be converted into shares of common stock.