Holder of €140m in State contracts taps shareholders for €800m
- Capita has been forced to tap shareholders for £700m (€800m) after failing to control costs and an aggressive spate of acquisitions
- The company employs more than 2,500 people across the island of Ireland
- It manages the Eircode postcode service under a State contract
Outsourcing giant Capita, which at one point managed tens of thousands of Irish home and SME loans as well as major State contracts, has been forced to tap shareholders for £700m (€800m) after failing to control costs and an aggressive spate of acquisitions.
The company employs more than 2,500 people across the island of Ireland and holds about €140m in State contracts, including one with the Department of Justice and Equality to provide managed IT solutions.
Capita also provides IT and administrative services to a number of companies in Ireland.
It also manages the Eircode postcode service under a State contract.
Last year, the group sold its Capita Asset Services unit, which serviced loans for Nama and other lenders as part of its ongoing restructuring.
Now, the British outsourcing company is raising £700m from investors to reshape a business that new chief executive Jon Lewis said had failed to adequately control costs and had grown unwieldy through acquisitions.
Mr Lewis, who took over in December, said Capita was going to do "fewer things better".
He added it has £300m of disposals lined up for this year and more in the following two years before it returns to revenue growth from 2020.
"Capita needs an injection of discipline," he said on a call with analysts.
The group, which employs 70,000 staff in total, ran into problems after a downturn and problems on contracts following years of acquisition-led growth that included a big push into Ireland.
It is one of a number of British service companies to have run into problems by chasing contracts on slim margins.
The most spectacular casualty was building and outsourcer Carillion which collapsed earlier this year.
"We are open for business. It's the end of a difficult chapter but there is a well-defined plan and it's about executing on that plan," Lewis told Reuters in a telephone interview.
Shares in the group were trading up 9.1pc at 174 pence by late morning yesterday. (Additional reporting Reuters)