This
announcement contains inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as it
forms part of domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended)
09 July 2024
Capita
agrees sale of Capita One
Capita plc
(Capita) has agreed to sell its standalone software business
(Capita
One), via the
sale of Capita One Limited by Capita Business Services Ltd
(the Seller),
to Orchard Information Systems Limited (the Buyer),
a wholly-owned subsidiary of the MRI Software, LLC
(MRI
Software)
(the Disposal)
in a deal that values Capita One Limited at £200m on a cash-free,
debt-free basis. This represents a c.10x multiple on 2023 EBITDA
for Capita One of c.£21m.
The
Disposal will result in the Capita group (the Group)
receiving expected gross cash proceeds of approximately £207m upon
completion of the Disposal (Completion).
Prior to Completion, the Group also expects to receive a cash
dividend of £4.8m from Capita One.
Capita One
provides local authorities, local education authorities and housing
associations with revenues & benefits, social housing
management and education management software. It helps local
authorities drive efficiency, maximise revenue collection, and
deliver essential public services as cost effectively as
possible.
The sale
of Capita One follows an evaluation of certain activities currently
carried out by Capita that are not core to the Group's future
strategy. As announced on 13 June
2024 at Capita's Capital Markets Event, standalone software
activities, including the Capita One business, are part of the
Group's activities that are being "managed for value".
The
Disposal will realise material value for Capita's shareholders and
the net cash proceeds will provide the Group with additional cash
resources to strengthen its financial position and further reduce
indebtedness, as well as funding for its transformation journey.
Although short term pro forma results are expected to be impacted
by the Disposal, Capita is maintaining its medium-term guidance for
the continuing Group based on the benefits of the cost saving and
technology initiatives previously outlined.
MRI
Software is a leading provider of real estate software solutions
that transform the way communities live, work and play. The Buyer
intends to support Capita One's growth plans and further develop
its product portfolio and customer base.
The
Disposal is expected to complete towards the end of August, subject
to satisfaction of the following Completion conditions:
-
The sale
of Capita One is a Class 1 transaction under the current Listing
Rules and is conditional on the approval of Capita's shareholders
(to the extent such approval is required by the Listing Rules as
may be amended or replaced by the FCA) with a shareholder circular
(the Circular) to be published in due course including a timetable
for a General Meeting of Capita shareholders; and
-
notification
and confirmation from the Secretary of State that no further action
will be taken under the UK's National Security and Investment
Act.
Proposed
changes to the Listing Rules, including changes to the rules
relating to Class 1 transactions, (the New
Listing Rules) are
expected to be finalised and implemented early in the second half
of 2024. If the New Listing Rules are implemented as currently
proposed and become effective prior to Completion, they would not
require the Disposal to be conditional upon the approval of
Shareholders. If, prior to the General Meeting, the FCA announces
that the New Listing Rules will become effective before the
Completion, the Company would permanently adjourn the General
Meeting and the Disposal would cease to be conditional on the
approval of Capita's shareholders. The Company would give notice of
this by issuing an announcement through a Regulatory Information
Service.
The Buyer
has paid a deposit of £20m (the Deposit)
to the Seller's solicitors to be held by them (or a third-party
escrow agent) as stakeholder pending Completion or termination of
the sale and purchase agreement in respect of the Disposal
(the SPA).
Upon Completion, the Deposit will be released to the Seller and
credited against the cash consideration payable by the Buyer at
Completion.
If the SPA
were to terminate without Completion having occurred, the Deposit
is required to be released and returned to the Buyer unless such
termination is a result of a breach by the Buyer of its obligations
under the SPA (in which case the Deposit shall be released to, and
retained by, the Seller).
The SPA
includes a joint and several guarantee by each of MRI Intermediate
Holdings LLC, MRI Software EMEA Limited and MRI Software Limited in
favour of the Seller guaranteeing the due and punctual observance
and performance by the Buyer of its obligations under the
SPA.
The total
assets of Capita One as at 31 December
2023 were £67m and the revenue and profit before tax for the
year then ended were £55m and £19m respectively. The EBITDA and
operating cash conversion of Capita One for the year ended
31 December 2023 were c.£21m and 92%
respectively. Capita One is expected to have cash of c.£18m
assuming Completion towards the end of August.
Adolfo Hernandez, CEO, Capita, said: "As I outlined recently
at our Capital Markets Event, Capita's strategy is to become a more
focused company, prioritising businesses where we can deliver
material opportunities in the future, with greater simplification
and cost reduction.
"Capita
One is a high-quality business that has performed exceptionally
well. Under its new owner, it is well positioned to benefit from
investment in its strategic growth.
"We remain
committed to the local public service market but want to see Capita
One be set up for continued success with an owner that can deliver
the investment it needs."
Barclays
Bank PLC, acting through its Investment Bank (`Barclays') is acting
as sole financial advisor and sole sponsor to Capita on the
transaction.
Notes
to editors:
Investor
enquiries
Helen Parris, Director of Investor Relations
Tel: 07720
169 269
Email:
IRteam@capita.co.uk
Stephanie Little
Deputy
Head of Investor Relations
Tel: 07541
622838
Email:
IRteam@capita.co.uk
Media
enquiries
Capita
external communications
Tel: 0207
654 2399
Email:
media@capita.co.uk
Barclays
Bank PLC, acting through its Investment Bank (Sole Financial
Advisor and Sole Sponsor to Capita)
Aamir Khan
Jessel Sheth
Tom Macdonald
Michael Hart
Stuart Muress
Tel: 0207
623 2323
About
Capita One
Capita One
is a provider of software solutions across the UK public sector,
helping local authorities drive efficiency, maximise revenue
collection and deliver essential public services as cost
effectively as possible. Capita One primarily serves local
authorities, local education authorities and housing associations,
and the business operates across three sectors: revenue and
benefits software, social housing management and education
management software. The Capita One senior management team
comprises: Jon Peart, Stuart Cheetham, Dave
Smedley, Paul Millard,
James Allard and Gavin Chamberlain. The Capita One senior
management team will be transferring with the business.
About
MRI Software
MRI Software is a leading provider of real estate software
solutions that transform the way communities live, work and play.
MRI Software's open and connected, AI-first platform empowers
agents, owners, operators and occupiers in commercial and
residential property organizations to innovate in rapidly changing
markets. MRI Software has been a trailblazer in the PropTech
industry for over five decades, serving more than six million users
worldwide, including social housing and the public sector. Through
innovative solutions and a rich partner ecosystem, MRI Software
gives real estate companies the freedom to realize their vision of
building thriving communities and stronger businesses. For more
information, visit https://www.mrisoftware.com/uk/.
About
Capita
Capita is
a modern outsourcer, helping clients across the public and private
sectors run complex business processes more efficiently, creating
better consumer experiences. Operating across 8 countries, Capita's
41,000 colleagues support primarily UK and European clients with
people-based services underpinned by market-leading technology. We
play an integral role in society - our work matters to the lives of
the millions of people who rely on us every day.
Important
Notice
Barclays,
which is authorised by the Prudential Regulation Authority (`PRA')
and regulated in the United
Kingdom by the FCA and the PRA, is acting exclusively for
Capita and no one else in connection with the proposed sale and
will not be responsible to anyone other than Capita for providing
the protections afforded to clients of Barclays nor for providing
advice in relation to the proposed sale or any other matter
referred to in this announcement.