Capita rebuffs private equity approaches

PRIVATE equity firms are circling troubled outsourcing firm Capita after it announced moves to shore up its finances.

Capita last week unveiled £513million losses and said it needed to raise £701million from shareholders.

The £1.2billion firm has since received more than 100 letters from private equity firms in the UK and the US asking to buy parts of the business.

There have been fears Capita – whose contracts include collecting the BBC licence fee and the London Congestion Charge – could suffer the same fate as government outsourcer Carillion which collapsed in January with £1billion of debt.

But chief executive Jon Lewis, appointed to revitalise Capita last December, has rebuffed the approaches.

‘The businesses are not for sale,’ he said. Lewis has been cheered by investors’ support for his plans. ‘A number of our major shareholders have been buying tranches of millions of shares. People have recognised we are not another Carillion.’

Woodford Investment Management, run by star fund manager Neil Woodford, is Capita’s second-largest shareholder. It admitted it had ‘misjudged’ the firm’s woes but said it ‘will be in better shape by the end of 2018’.

Lewis plans to cut costs by £175million a year, simplify Capita’s structure and raise another £300million by selling three businesses this year.

A dozen Capita directors, including Lewis, could share a £71.5million bonus pot under long-term incentive plans.