UK accountants to float company for non-audit work

Four British accountancy firms yesterday unveiled plans to create a new company out of their non-audit businesses which they will float on AIM for £26.6m.

The business, to be called Vantis, will target the small business market by offering advice varying from problems related to corporate finance and financial services to tax and insolvency.

The move is intended to snap up smaller clients, who are often passed over by large accountants because they cannot pay high fees for business services consultation.

The four firms which will form Vantis are MBS, which is based in the City and has 24 partners, Morton Thorton, based in St Albans, Walkers Group, which operates in the North-east, and Surrey-based Bradney Group.

The firms are merging their consultancy divisions but not their audit departments. The decision is a bid to head off problems afflicting the accountancy profession since the collapse of US energy giant Enron, which highlighted potential conflicts of interest between auditing and selling lucrative support services.

Vantis will float on 1 May at 90p a share. The float will raise £2.65m of new money net of expenses, which it will use as fire power to expand further including by acquisition. The company will be 48 per cent owned by its directors.

Paul Jackson, the chief executive of Vantis, said: "There are plenty of companies which have failed to offer to their clients services additional to traditional accountancy and taxation. We will be able to exploit that and bring on board other firms which have a limited offering either by consolidating them into our company or by acquisition."

Accountancy remains a fragmented industry below the level of Big Five, which dominate the market. According to the Institute of Chartered Accountants, 14,800 chartered accountancy practices are registered in the UK, but the top 10 concentrate almost entirely on providing services for Britain's blue chip companies.

Charles Stanley has been appointed as adviser and broker to the issue. Based on the combined income of the four firms, Vantis would have ranked number 24 in the accountancy sector in 2001.