UK Edition
Capita close to agreeing sale of recruitment division
Outsourcing firm Capita is in talks for the sale of its recruitment division as it begins the process of offloading weaker parts of the business after a turbulent year.
The firm is understood to be in advanced discussions to sell the business to Endless, a specialist turnaround investor, in a deal which would value it at around £25m. Capita declined to comment on the deal.
Capita blamed the division for contributing to its poor performance last year: pre-tax profits fell 33pc in 2016 to £74.8m after weak revenues in both recruitment and IT services, on top of a £50m write-off of assets.
The recruitment arm finds candidates for jobs in the charity and public sectors, as well as for professional services firms and telecoms companies.
Investors are likely to see the sale of the business as the first step towards bringing the firm back on track under the guidance of a new leadership team headed by chairman Ian Powell, who has held the position since the start of this year.
Capita announced in March that chief executive Andy Parker was to step down, although he will remain in post until the autumn in order to “facilitate a smooth transition”. No new chief executive has yet been announced.
As well as overseeing the sale of the recruitment business, Mr Parker is also seeking a buyer for its asset services division, which could fetch up to £600m. When news of the proposed sale was announced in December last year, shares in the company hit a 10-year low of 506p amid a number of profit warnings.
Shares in the company were trading at around 559p on Tuesday.
Capita hopes the sales will allow it to focus on its core business of handling large multi-year process management contracts in both the public and private sectors.
Capita is one of the largest private sector employers in Britain, and has a global workforce of about 73,000.
The business, along with many of its outsourcing peers, has suffered in a squeezed market with increasing costs. In November, the company overhauled its senior management structure to create six new divisions, which analysts speculated was a precursor to further redundancies.
It was also demoted from the FTSE 100 earlier this year.