Fears for thousands of Irish Capita jobs as it sells off assets
Thousands of Capita staff in Ireland face an anxious wait as the British outsourcing giant plans to raise cash and sell assets in a bid to stabilise its business.
Shares in the stock market-listed company plunged more than 40pc yesterday as investors, still reeling from the collapse of Carillion, fled Capita.
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, where it provides managed IT solutions.
Trade union Unite yesterday called on the government to impose a moratorium on outsourcing pending a risk assessment of major contractors. It said it was "time to call time" on the "outsourcing culture".
Capita provides IT and administrative services to a number of companies in Ireland. It also manages the Eircode post code service under a State contract.
Last year, the group sold its Capita Asset Services unit, which serviced loans for Nama and other institutions, to the UK's Link Group and no longer has any relationship with the bad bank.
Capita's new CEO, Jonathan Lewis, stunned the market with the dramatic announcement that the group is suspending dividend payments and will raise up to £700m (€800m) from shareholders to shore up the company. He also slashed its profit forecast by 30pc.
Capita will also cut costs and initiate the sale of non-core businesses.
He warned that "significant change" is required for Capita's next stage of development.
"We are now too widely spread across multiple markets and services, making it more challenging to maintain a competitive advantage in every business and to deliver world-class services to our clients every time," said Mr Lewis.
"An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new equity.
"We have identified a small number of quality businesses that do not fit with our core skills for which there will be better owners and a process to maximise value will commence shortly," added Mr Lewis.
He said that Capita had also relied too much on acquisitions to drive growth.
Capita has had a presence in Ireland since 2000, when it acquired IRG Registrars, which provides shareholder-related services to a number of stock market-listed companies here.
In 2014, Capita acquired Irish outsourcing group South Western for €35m.
The unit provides financial, human resources and customer relationship management services to a number of private and listed firms, as well as government departments.
Like Carillion - the British outsourcing giant that collapsed last month - Capita provides vital services in Britain, from running the system that pays National Health Service dentists, to hospital triage support, collecting the congestion charge for driving in central London and helping retailers manage online shopping sites.
It employs 73,000 people and operates primarily in Britain over hundreds of separate contracts.
As part of a consortium, Carillion had won contracts to build five schools and one further education college in Ireland. (Additional reporting: Reuters)