Capita in exclusive talks with Montagu to sell its ESS division

The firm is currently investing from its sixth-generation fund, which is said to have closed on €3.5bn in Q2 of 2020; however, the firm has declined to comment on this.

The vendor was engaged with Goldman Sachs in June 2020 to sell the asset for around £500-700m, according to a report by Unquote sister publication Mergermarket. The process saw interest from a number of trade buyers, as well as Bain Capital, KKR, Advent International, Francisco Partners and TPG, in addition to Montagu.

The asset was said to be marketed based on adjusted EBITDA of £48m for 2020, which is estimated to fall in the next few years due to costs required to update its software-as-a-service cloud products. EBITDA is forecast to be £41m next year and £40m for 2022, with revenues declining to £93m in 2021 from £94m in 2020, according to Mergermarket.

Capita was speculating in October 2020 on whether to retain the asset in light of low offers, according to a report by Bloomberg; however, Montagu was confirmed as the only remaining bidder on 26 November 2020. Sources told Mergermarket that the asset could be sold for £350-500m.

The company provides school management software to monitor data on student attainment, parental engagement, and financial management. Capita currently has a market capitalisation of £694.46m.

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• Topics
• Buyouts
• UK / Ireland
• Technology
• United Kingdom
• Montagu Private Equity
• Bain Capital
• TPG
• Advent International
• KKR