Capita is again clearing out another of the previous CEO’s past conquests with confirmation this morning that it is offloading software licensing and hardware reseller Trustmarque to One Equity Partners for £111m.
Readers will no doubt be delighted to hear that the sale represents a good earner for Capita, everyone’s fave outsourcing badass, which paid £57m for Trustmarque in 2016. Not all of Capita’s other past divestments have proved as financially nourishing.
“We are pleased to have agreed the sale of Trustmarque to One Equity Partners following a competitive sales process,” said Jon Lewis, who grabbed the controls of what appeared to be a slowly sinking ship in December 2017.
Since then he has revised the structure of the business, most recently (in March 2021) creating three divisions and plonking all the unwanted ones into a pot labelled Portfolio, which until today included Trustmarque.
“I am delighted that, once this sale is completed, we will have exceeded our disposals target – and achieved this much earlier than planned,” said Lewis.
Capita had hoped to raise £700m by selling businesses in the Portfolio division.
So far this includes the sales of Secure Solutions and Services to NEC Software Solutions for £62m, AMT Sybex software biz to Jonas Computing for £40m; the speciality insurance business to Marco Capita Holding for an undisclosed sum; the AXELIOS joint venture to PeopleCert International for £380m; and the sale of Education Software Solutions for an initial sum of £298.5m with another £45m due subject to certain conditions being met.
Lewis added: “It marks another significant step towards materially reducing our debt, as we continue to simplify and strengthen Capita, and become a more successful business for the long term.
“We are now focused on selling the remaining businesses in our Portfolio division, with the goal of disposing of the majority by the end of 2022.”
Net debt at Capita stood at £894.4m at the halfway point of the the last financial and calendar year.
Lewis took over as chief exec in 2017 following the brief reign of Andy Parker – who succeeded Paul Pinder. The CEO arrived in the year after Capita had made its first ever profit warning and put thousands of employees at risk of redundancy, so this was a mammoth turnaround task.
Lewis initially described Capita as “too complex” and “driven by a short-term focus” and said it “lacks operational discipline and financial flexibility.”
He said too much time was spent on growing via acquisition and not enough on meeting the demands of new customers.
As for Trustmarque, Capita said the Microsoft Gold Partner turned over £122m in the year ended 31 December 2020 and made a pre-tax profit of £16m. Capita is due to report its full year 2021 results in March, so we’ll be able to see at that point if the reseller had a tougher time or not in that fiscal year.
Capita said One Equity Partners will pay £110m on a cash and debt free basis. ®