Agreement has been reached on private equity firm Allego Funds’ acquisition of PwC’s Australian public sector advisory business.
The business is to become an independent government-specialist advisory firm under the name Scyne Advisory.
Scyne will provide advice only to the public sector and public sector agencies.
Allegro is to acquire the business for $1 and expects to invest more than $100 million in developing it as an independent entity. The firm is expected to employ around 1,750 people in total and will be fully independent of PwC. The transfer of assets will be backdated to 1 July.
PwC sought divestment of its public sector advisory business as part of its efforts to end ongoing reputational damage from revelations that, while it was advising the federal government on restructuring tax avoidance rules, it was also advising clients on how to circumvent proposed new rules. The federal government has since effectively banned PwC from tendering for future advisory roles.
Announcing details of the deal on 4 July, Allegro said its funding of Scyne will support employment and operational costs during a transitional period.
Scyne is to establish an independent board of directors to oversee a rigorous, ASX-standard of governance and integrity in its operations. Former Federal Court judge Andrew Greenwood has been recruited as a non-executive director. Additional candidates for non-executive director roles, including an independent board chair, are being interviewed.
Once it has been established, the board will also set up audit and risk, and people and remuneration sub-committees.
Allegro said a purpose-designed independently reviewed governance structure had been designed in line with Australian public sector standards. This will include establishing a probity, conflict and ethics board sub-committee which will be chaired by Greenwood. The sub-committee will vet potential employees prior recruitment by Scyne as well as reviewing future potential conflict of interest and code of conduct matters. This will include reviewing all contracted advisory work for conflicts of interest and probity of involved employees.
Scyne will also implement any relevant findings of reviews currently being conducted by PwC regarding tax confidentiality matters.
Members of the current leadership teams of PwC’s government, health, infrastructure and defence (GHID) and trust and risk (T&R) practices will lead Scyne in the short term before the board conducts a search for a permanent chief executive to head the leadership team.
Allegro’s operating partners will support the interim leadership team as it transitions PwC partners and employees to Scyne and sets up new, independent, systems.
According to Allegro, this will allow current public sector client work to continue uninterrupted through the transition which is targeted to be completed by the end of August.
Scyne and PwC are engaging with the federal and state governments to to try to convince them them to allow their procurement panels to consider Scyne for future work.
Former PwC partners Tim Jackson (Sydney) and Ben Neal (Canberra) have already been appointed Scyne partners. They said the new leadership’s immediate focus would be on achieving a rapid transition to independence with ethics, strong governance embedded from the start.
“We have a once-in-a-generation opportunity to lead the change required in government advisory in Australia,” they said in a statement. “The DNA of our people is solving complex problems impacting the public sector. Governments throughout Australia are assisted on a daily basis by external advisers, which play a meaningful role in the ecosystem of policy development and service delivery.
“Governance and culture will be at the core of the new business. We are pleased to have secured roles for around 1,750 people to continue making a contribution to governments across the country. Our people have deep sector knowledge and they will set our new culture, with the needs of our clients’ remaining paramount. Restoring those clients’ trust is our number one priority.”
Allegro co-founder Adrian Loader said: “It’s clear there is a need for a strong and independent government advisory firm of scale in the Australian market. Scyne Advisory will have an industry-leading governance model able to meet the requirements of the Australian government and its agencies.”
Loader added that Allegro had deep expertise in managing corporate carve-outs – extracting businesses from complex organisational structures and putting in place a strong governance framework that would support cultural change and improve performance. He said Allegro’s purchase of Toll Global Express from Japan Post and re-launching it as Team Global Express was an excellent example.
Allegro has more than $4 billion in assets under management across Australia and New Zealand.