Capita sells supplier assessment services for £160m

Capita has agreed to sell its supplier assessment services business for £160m as the outsourcing company disposes of non-core operations following the collapse of rival Carillion.

The company will sell the business, which includes Constructionline, to funds linked to private equity firm Warburg Pincus. The cash will be used to reduce net debt. Capita said in April it would sell £300m of businesses in 2018 after issuing a profit warning in January.

Supplier assessment services helps buyers and suppliers, particularly SMEs, to manage their supply chains. It bought Constructionline, which connects buyers and suppliers in the building industry, from the government in 2015.

Supplier Assessment Services’ underlying revenue and operating profit were £14m and £6m respectively in the year to 31 December 2017 and the business had gross assets of £26m.

Chief executive Jon Lewis said “This transaction marks a further step in executing the strategy announced in April aimed at simplifying and strengthening the business.” Capita also said it had won the tender for the Ministry of Defence's fire and rescue project.

Lewis said in April that Capita was too complex after relying on acquisitions to grow as he unveiled a £701m rights issue. He rejected comparisons with Carillion, which went bust in January, but outsourcing companies have suffered from rising costs and thin margins.

Capita's shares, which have lost more than three-quarters of their value in the past year, rose 4.5% to 159p at 08:26 BST.