BBC TV licence fee collector Capita in talks with private equity house Montagu to sell its education software arm

Letitia Denham



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Outsourcing giant Capita has revealed it is in exclusive talks with private equity house Montagu over a possible sale of its education platform arm.

In the summer, Capita announced that it wanted to offload its Education Software Solutions arm to help reduce its debt pile, but had so far failed to attract a sufficiently high bid.

Capita, which saw its share price plummet by 70 per cent in March, is best-known for overseeing licence fee collections for the BBC and running the London congestion charge.



text, letter: Capita is best-known for overseeing licence fee collections for the BBC and running the London congestion charge


© Provided by This Is Money
Capita is best-known for overseeing licence fee collections for the BBC and running the London congestion charge

The company said today: ‘Capita confirms it has entered into exclusive talks with Montagu over the potential sale of ESS.

‘There can be no certainty that a sale will be concluded nor any certainty over the terms of any such sale.’

Capita’s School Information Management System platform is used in 21,000 schools across England, Wales and Northern Ireland and speculation had initially suggested it could be valued at £700million.

But, the entire Capita business is currently only worth around £750million, based on current share prices.

According to reports last month, Capita received interest from investment firms Bain Capital, TPG and CVC Capital Partners but all three balked at the high price being asked for ESS. 

Shares in FTSE 250-listed Capita are up 0.1 per cent to 44.92p this morning. A year ago, the company’s share price stood at 160.40p.

Broker Peel Hunt said the sale ‘could be crucial in reducing net debt and leverage to acceptable levels’, with December 2020 net debt estimated to be around 3.4 times EBITDA, versus the current bank covenant of 3.5 times. 

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