Friday, 31 July 2009

Civica end-runs Capita, buys another, and wins biggest ever deal

(By Anthony Miller – Friday 31st July 2009 8:15am). It’s been a heck of a week for 3i-backed public sector software and services firm, Civica. Just a couple of days ago they acquired Cheshire-based mobile software and consultancy firm, Limesoft. Then on the very same day, Civica announced its biggest ever contract with Luton Borough Council as prime ICT contractor for the BSF (Building Schools for the Future) programme. The £44m deal spans ten years and Civica will work in a consortium headed by QED Wates. The original deal was signed in January.

Then today we heard the news that Civica has picked up the IBS OPENSystems revenues and benefits software business from Capita. Capita was forced into the sale by the Competition Commission (see Capita forced to sell IBS R and B business and prior posts) which ruled that the UK’s leading BPO player already had more than its fair share of the R&B market. The irony is that Civica had previously told the Competition Commission that it will not pursue expansion in the R&B market “for the next two to three years while it was in the process of moving its existing customers on to the new version of its R&B software system”. Obviously the opportunity was too good to miss! Civica is paying Capita £10m cash, no strings, for the IBS R&B business. Capita paid nearly £80m to take out AIM-listed IBS in June ’08. The R&B business comprised about a third of IBS revenues, so it looks like Civica got a really good deal.

We have long commentated on Civica, a public-to-private-to-private saga which TechMarketView subscription service clients can follow in the UKHotViews archive. Civica claims an ‘adjusted’ operating profit of £21m on £134m in revenues for the year to 30th Sept. ’08, with £101m from its own software. This would likely put Civica among the Top 50 suppliers of software and IT services to the UK market and a Top 20 software player.

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