Australia: Link Group in $1b bid for Capita’s asset management arm

A vote leave supporter holds a Union flag, following the result of the EU referendum, outside Downing Street in London, Britain June 24, 2016. REUTERS/Neil Hall

Australian financial services firm Link Group and three buyout funds are in the race for UK-based Capita’s asset management services arm in a deal worth up to 800 million pounds ($1.02 billion).

Citing sources familiar with the matter, Reuters reported that the British outsourcing group hired Goldman Sachs in 2016 to auction off its unit Capita Asset Services.

Capita is a UK-based provider of business process management and integrated professional support service solutions, with a footprint covering the UK, Europe, South Africa and India. It works with clients across a range of sectors that include governments, education, transport, health, life and pensions, insurance, and other private sector organisations.

Its unit, Capita Asset Services, provides shareholder solutions, fund management and loan servicing for all types of secured and collateralised loans. The business operates as a share registrar to 42 per cent of Britain’s main market listed companies.

This divestment is part of a move to raise cash and return to growth following a string of profit warnings. This was partly due to Brexit, which is having a negative impact on a number of British businesses.

The three buyout funds competing with Link Group to acquire the unit are Chicago-based private equity fund GTCR, European rival CVC Capital Partners and European buyout fund BC Partners.

Australia’s Link Group is a provider of shareholder management services as well as analytics, registry and fund administration services to more than 2,500 clients.

To date, none of the funds engaged in the bidding process have issued public comments.

Capita has a market value of 4.3 billion pounds. Its concentration on the UK means it does not benefit from the translation of foreign currencies back into a weak pound. Earlier this year, its chief executive Andy Parker, resigned following the company posting a larger-than-expected decline in profits, as well as a warning the firm would only return to profitability in 2018.

The sale, which could generate between 700 and 800 million pounds, would help it to reduce its debt burden. This stood at 1.7 billion pounds at end of 2016.

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