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Capita agrees £400m sale of Education Software Solutions

The business will be sold to Tiger UK Bidco, a new company established by funds invested by Montagu Private Equity

Outsourcing and professional services firm Capita has announced it has agreed to sell its Education Software Solutions (ESS) business to Tiger UK Bidco, a new company established by funds invested by Montagu Private Equity, in a deal worth up to £400 million. 

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

Montagu will assume liabilities such as working capital and dept worth £57 million, with the private equity firm to pay £298 million on completion of the deal – which is expected in early 2021. 

Montagu is also investing in education technology provider ParentPay, with ESS to become part of the ParentPay group upon completion of both investments. Once the ParentPay deal has achieved regulatory approvals, Capita will also receive an additional £45m. 

For the year to 31st December 2019, ESS reported gross assets of £96.2m and pre-tax profit of £52.7m. Capita also confirmed that the ESS management team will transfer with the business.

“We are pleased to have agreed the sale of ESS to Montagu Private Equity after a comprehensive auction process,” said Jon Lewis, Capita CEO. “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.”

Following a strategic review of Capita’s Software division, Capita said it will retain software assets that are catalysts for growing out its other services, but plans 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 the company will also be announced in due course, Capita added. 

"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,” Lewis added.

"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.”

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