US, UK units of KPMG buy out Indian arm for $210 million: report

KPMG’s US and UK divisions have jointly acquired a 33% stake in KPMG Global Services (KGS) for $210 million (about Rs1,800 crore) from the firm’s India partnership, The Economic Times reported, citing people familiar with the development.

The transaction is the first such instance of a Big Four firm divesting its captive operations in India.

KGS operates as a centralized delivery center that supports 50 KPMG member firms globally. Its operations include services in audit, consulting, tax, and technology.

The acquisition was communicated during a call with KPMG partners last Monday, according to The Economic Times.

Previously, KGS was jointly owned by KPMG India, KPMG US, and KPMG UK, with each holding a one-third stake.

Despite equal ownership, the Indian partnership managed the delivery center. With the latest transaction, operational control of KGS now moves to the US and UK arms of the firm.

Within the structure of professional services networks, local partnerships are given the authority to deliver services in their designated regions. The decision to divest was reportedly debated at a lenght among KPMG India partners.

While the transaction provides immediate financial returns for current Indian partners, it also relinquishes a key asset, according to the report. The Indian partnership will no longer generate revenue from global assignments managed from KGS.

KPMG India, which has faced high attrition and is the smallest among the Big Four firms in the country, is expected to use the funds to increase partner remuneration to align with industry standards.

Moreover, the proceeds are likely to be used in expanding the partnership base and enhancing internal capabilities.

The move comes as KPMG India competes with bigger rivals such as EY, PwC, and Deloitte, which have significantly scaled their consulting, technology, and tax advisory services.

The capital from the stake sale is expected to strengthen KPMG India’s position in this ongoing competition.