REG-Capita PLC: Agreement to sell Education Software Solutions

CapitaAnnouncement

14/12/2020 08:15

LEI no. CMIGEWPLHL4M7ZV0IZ88

This contains inside information

14 December 2020

Capita plc

Agreement to sell Education Software
Solutions                                                                                                

Capita plc (‘Capita’) today announces that it has agreed to sell its
Education Software Solutions (‘ESS’) business to Tiger UK Bidco Limited, a
newly formed company established by funds advised by Montagu Private Equity
(‘Montagu’), in a deal that values ESS at up to £400m.

ESS is a standalone provider of management information system (MIS) and
related software for the education sector.

Part of the consideration agreed is for Montagu to assume liabilities such as
working capital and debt worth £57m. Montagu will pay £298m on completion,
expected early in 2021.

Montagu has also agreed to invest in ParentPay (Holdings) Ltd
(‘ParentPay’), a provider of education technology. Following successful
completion of both investments, ESS will become part of the ParentPay Group.

An additional sum of £45m will subsequently be payable to Capita once
Montagu’s agreed investment in ParentPay has achieved regulatory approvals.

The total enterprise value of the ESS disposal is up to £400m.

Proceeds from the transaction will be used to strengthen Capita’s balance
sheet and £50m will be used to replace the remaining value of an asset-backed
financing agreement, relating to intellectual property developed by ESS, which
was entered into in 2012 with the Capita pension scheme.

The sale of ESS is a Class 1 transaction and is conditional on the approval of
Capita’s shareholders, with a circular to be posted in due course, including
a timetable for a General Meeting, expected to be held in January.

The gross assets of ESS and the reported profit before tax for the year to 31
December 2019 were £96.2m and £52.7m respectively. 

The ESS senior management team will be transferring with the business.

As previously announced, the process to sell ESS followed a strategic review
of the Software division, after which we decided to focus on a portfolio of
core capabilities better aligned with and which support our consulting,
transformation and digital BPO services, and the vertical markets of the rest
of Capita.

We will retain software assets that are catalysts for growing our other
services, but plan to dispose of standalone software products that have little
overlap or cross-sell with the rest of Capita, such as ESS.

Further disposals of other standalone businesses across Capita will be
announced in due course as we continue to simplify and strengthen the
business.

Jon Lewis, Capita’s Chief Executive Officer, said: “We are pleased to have
agreed the sale of ESS to Montagu Private Equity after a comprehensive auction
process.

“ESS is a business that Capita originally bought for £10m so we have
created significant value over 25 years of ownership.

“We announced our intention to sell ESS earlier this year, as part of our
strategy to simplify and strengthen Capita.

“The sale will help us simplify by disposing of a standalone business, while
the proceeds will help strengthen Capita’s balance sheet, as we build
towards a more focused, sustainable business for the long term.

“At the same time, our colleagues at ESS will benefit from a new owner with
the focus and means to support further investment and growth, as the business
transitions to its next-generation cloud-native software.”

Capita is being advised on the transaction by Goldman Sachs International, and
Barclays Bank PLC, acting through its Investment Bank, is acting as sponsor.
 

For more information please contact:

Capita investor enquiries
Stuart Morgan
Director of Investor Relations
Tel: 07989 665484
Email: IRteam@capita.co.uk

Capita media enquiries
Capita external communications
Tel: 0207 654 2399
Email: media@capita.co.uk 

Montagu
Rob White, Mikaela Murekian, Catriona Crellin 
Greenbrook Communications
Montagu@greenbrookpr.com
+44 207 952 2000

Capita is a consulting, transformation and digital services business. Every
day our 61,000 colleagues help millions of people, by delivering innovative
solutions to transform and simplify the connections between businesses and
customers, governments and citizens. We partner with clients and provide the
insight and cutting-edge technologies that give time back, allowing them to
focus on what they do best and making people’s lives easier and simpler. We
operate in the UK, Europe, India and South Africa – and across six
divisions: Customer Management; Government Services; People Solutions;
Software; Specialist Services; and Technology Solutions. Capita is quoted on
the London Stock Exchange (CPI.L). Further information can be found
at: http://www.capita.com

Montagu is one of Europe’s leading private equity firms and has been
investing in businesses for over fifty years. Montagu’s investment strategy
is focused on partnership with management in buyouts of high-quality companies
operating in stable and growing sectors, providing products and services that
their customers would badly miss. It develops a shared strategic vision with
management and then provides the necessary financial, strategic and
operational resources to help realise that vision and support growth. Montagu
partners with companies with enterprise values between €200m and €1bn and
has €8bn assets under management. For additional information on Montagu,
visit www.montagu.com

Additional information on ESS

ESS is a standalone UK-based provider of market-leading management information
systems for educational institutions. The business aims to improve educational
outcomes by providing software technology, apps and data and analytics
solutions to support teachers, administrators, students and parents in their
day-to-day administrative activities and communications, allowing them to
dedicate more time and resources to focus on learning and improved educational
outcomes.

ESS’s primary information management system, ‘SIMS’, supports over
19,000 schools in the UK and internationally with, amongst other things,
completion of statutory and school critical processes. Further and higher
education institutions in the UK rely on ESS’s ‘UNIT-e’ software
technology to manage their student and staff records and to optimise the
management of their institutions’ data. ESS also offers, amongst other
services, cost-effective solutions for cataloguing school and public
libraries, finance management, payments and access to an ecosystem of over 150
application programming interface partners.

The ESS senior management team comprises: Andy Bennett, Managing Director;
Rajul Modi, Finance Director; Simon Walters, Director of Services; Robin
Lipscomb, Director of Development; Bob Yorke, Sales Director; and Susi
Mackeown, Product Director. They are key individuals to ESS and will be
transferring with the business.

Important Notices

Barclays Bank PLC, acting through its investment bank ("Barclays"), which is
authorised by the Prudential Regulation Authority (“PRA”) and regulated in
the United Kingdom by the Financial Conduct Authority and the PRA, is acting
exclusively for Capita and no one else in connection with the matters set out
in this announcement and will not be responsible to anyone other than Capita
for providing the protections afforded to clients of Barclays nor for
providing advice in relation to the matters referred to in this
announcement. 

Goldman Sachs International, which is authorised by the PRA and regulated by
the FCA and the PRA in the United Kingdom, is acting exclusively for Capita
and no one else in connection with the matters referred to in this
announcement and will not be responsible to anyone other than Capita for
providing the protections afforded to clients of Goldman Sachs International,
or for providing advice in relation to the matters referred to in this
announcement.

ENDS



Copyright (c) 2020 PR Newswire Association,LLC. All Rights Reserved