Capita asks for £700m to trim down the firm

CaPITa’S boss plans to raise more than £700m from investors as part of his bid to rescue the outsourcer.

Jon Lewis, who was parachuted in as chief executive in December, said the cash from the rights issue would help rein in debt and simplify the company’s sprawling structure.

It came as Capita revealed losses had widened to £513m in 2017. Lewis, a turnaround specialist, blamed its ‘self-inflicted’ woes on mounting debt, wasteful spending and a spate of acquisitions that made the business too unwieldy.

The 56-year-old said: ‘Capita needs an injection of discipline. Don’t underestimate the magnitude of the change taking place. It is root and branch.’

Lewis said Capita’s different arms would pool more resources to save money, use data to improve efficiency and introduce systems to make sure they all took the same approach to contracts.

Up to £500m will also be ploughed into the most promising areas of the business, including software and data analytics. Shares shot up more than 13pc, or 21p, to 180.8p after the announcements.

It revealed its losses last year ballooned to £513.1m, up from £89.8m in 2016. This was mainly due to £851m of one-off costs, including anticipated writedowns of contracts and businesses bought under previous management. Capita holds numerous government contracts, including running the London congestion charge, Jobseeker’s allowance helpline, teachers’ pensions and electronic tagging services for the Ministry of Justice.

But it ran into trouble after taking on projects with waferthin margins, leaving little room for manoeuvre when things went wrong.

In its announcement yesterday, Capita said recent turmoil had led some of its clients to axe contracts. Matt Oliver by