Capita sells software business to MRI for $254Mn
LONDON, UNITED KINGDOM — Outsourcing giant Capita plc has announced the sale of its standalone software business, Capita One, to MRI Software for £200 million ($254 million).
Capita One, known for providing local authorities, education authorities, and housing associations with software solutions for revenue and benefits, social housing management, and education management, will now be under MRI Software’s umbrella.
The deal, valued at 10 times Capita One’s 2023 EBITDA of £21 million ($27 million), is expected to strengthen Capita’s financial position and reduce its debt. Upon completion, it will provide Capita with approximately £207 million ($263 million) in cash proceeds, along with a £4.8 million ($6.1 million) dividend.
Strategic move for Capita and MRI Software
The divestment aligns with Capita’s recently announced strategy to become more focused and prioritize core businesses.
“As I outlined recently at our Capital Markets Event, Capita’s strategy is to become a more focused company, [prioritizing] businesses where we can deliver material opportunities in the future, with greater simplification and cost reduction,” said Adolfo Hernandez, Capita’s CEO.
“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.”
MRI Software, a provider of real estate software solutions that serves over six million users worldwide, sees the acquisition of Capita One as an opportunity to expand its presence in the UK public sector software market.
“MRI’s AI-first approach and platform are designed to empower clients to break down information siloes, unify data across systems and deliver the best outcomes for their communities,” said Patrick Ghilani, Chief Executive Officer of MRI Software.
Deal structure of Capita One sale
The transaction, classified as a Class 1 transaction under the current Listing Rules, requires Capita’s shareholder approval and confirmation from the Secretary of State under the UK’s National Security and Investment Act.
The sale is expected to be completed by the end of August 2024, pending these approvals.
While the sale may impact Capita’s short-term results, the company maintains its medium-term guidance for the continuing group, citing benefits from cost-saving and technology initiatives.
Capita, which employs 41,000 people across eight countries, primarily serves UK and European clients with people-based services underpinned by technology. It secured the #19 spot in the OA500 2024, an objective index of the world’s top 500 outsourcing companies.
