Capita PLC (LON:CPI) said it is selling its payments business Pay360 Ltd to Access PaySuite, a division of Access Group, in a deal worth £150mln and also announced an extension to its contract with Barnet Council for back-office services.
The sale of Pay360 follows a strategic review of the division and is part of Capita’s strategy “to build a more focused, sustainable business for the long term”, the business outsourcing company said.
Pay360 is a UK-based, FCA-regulated payments business with 2,500 customers across the public and private sectors, providing gateway and acquiring services, as well as payment solutions. It recently expanded its capabilities into payment facilitation with the launch of its Evolve platform.
In 2021, Pay360 processed £8.6bn in transaction value across 142 million transactions.
Including cash-like and debt-like items, Capita expects to receive gross proceeds of £156mln from the disposal. It said the sale will strengthen its balance sheet by reducing debt and providing additional liquidity.
“The sale is a great opportunity for the new owners to help Pay360 realise its full potential, and our colleagues at Pay360 will also benefit from the focus that this change of ownership will bring,” said Jon Lewis, Capita’s chief executive officer in a statement.
“Capita will utilise the cash proceeds of the sale to benefit our digital offerings for clients and further reduce net debt. The Pay360 senior management team and employees will remain with the business as they transfer to new ownership,” he added.
In a separate statement, Capita revealed that its contract with Barnet Council to supply back-office services has been extended.
The extension is worth £42.7mln and with indexation and potential additional work, it could be worth up to £57mln, the company said. The extended contract begins at the start of September 2023, which is when Capita’s current 10-year deal with Barnet Council is scheduled to end.
Under the extension, Capita will continue to provide HR and accounts payable services for a further year to the end of August 2024. In addition, it will continue to deliver IT, customer services and revenue and benefits services for the council for an additional two years and seven months until the end of March 2026.
Al Murray, Capita’s CEO for Capita Public Service, said: “The extension of our contract with Barnet Council reflects the strength of our long-term relationship with the council. It also highlights our focus on creating better outcomes through the delivery of essential services for the local community.”
He noted that the extension follows on from the successful renewal of the company’s PCSE contract with NHS England earlier in the year.