Capita plc announced a significant transaction, agreeing to sell its 75% stake in Fera Science Limited (‘Fera’) to Bridgepoint Group plc for an enterprise value of £60m, cash-free and debt-free. This deal places the total value of the joint venture at £80m, translating to a 10.8x multiple based on Fera’s 2022 standalone EBITDA of £7.4m.

Financial Benefits for Capita: Enhanced Liquidity and Balance Sheet

The sale will see Capita receiving £62m in cash proceeds upon completion, including adjustments for cash, debt-like items, and working capital. This influx of capital is expected to bolster Capita’s balance sheet significantly, providing additional liquidity to support investments across the Group.

Fera’s Growth and Market Focus Since 2015

Established in 2015 as a joint venture between Capita and the Department for Environment, Food & Rural Affairs (Defra), Fera focuses on the agriculture, farming, and food production markets. It offers a range of services including environmental testing, research, and advisory services, catering to both public and private sectors. In Capita’s consolidated financial statements, Fera reported a revenue of £45m and a profit before tax of £3m for the year ending 31 December 2022, with gross assets valued at £37m as of 30 June 2023.

Conditions and Approvals for Transaction Completion

The transaction’s completion is subject to several conditions, including National Security and Investment Act clearance, which has been secured. Additionally, consent from the superior landlord is required for changes in the title of the property from which Fera operates, a process that is currently underway. Post-completion, Defra will retain its shareholding, and all current senior management and employees of Fera will continue with the company under Bridgepoint’s majority ownership.

Capita’s Strategic Simplification and Strengthening

Jon Lewis, Capita’s CEO, expressed satisfaction with the sale, which follows a competitive auction process. He highlighted the growth and professionalization of Fera over the past eight years, its transformation into a profitable commercial enterprise, and its alignment with Capita’s strategy to simplify and strengthen its core markets. The sale is part of Capita’s broader strategy to divest non-core assets, including the recent disposal of its travel businesses, further solidifying its financial position.

Capita is being advised on the transaction by Strata Partners, marking a significant step in its ongoing strategic realignment.

  Bridgepoint Group, Capita, Fera Science, Jon Lewis, United Kingdom