Capita agrees to sell payments arm Pay360 in £150m deal

Capita has announced a deal to offload its payment transactions business as part of measures to streamline operations and slash debts.

The outsourcing giant said that it would earn £150million from the sale of Pay360 Limited to Access PaySuite, a division of software provider The Access Group.

Pay360 processes over 250 million card transactions worth more than £11billion each year for major companies like WH Smith, broadband operator Plusnet, and model railway maker Hornby, according to its website.

For the first half of this year, it earned £27.3million in revenue, underlying earnings of £10.5million and posted a pre-tax profit of £3.1million, while its gross assets at the end of June totalled £63.6million.

Approval of the deal is conditional on the approval of shareholders and the Financial Conduct Authority, as well as confirmation from the UK Government that no further action will be taken under the National Security and Investment Act.

Chief executive Jon Lewis said the deal would be ‘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’.

He added: ‘Capita will utilise the cash proceeds of the sale to benefit our digital offerings for clients and further reduce net debt.’

Capita has already completed the sale of four businesses in 2022, including IT services firm Trustmarque to JPMorgan’s former merchant banking arm and two specialty insurers to Marco Capital Holdings.

This helped slash its net arrears by £169.4million to £710.4million during the opening six months of the year and took the total receipts from its disposal programme to more than £750million.

Last month, the outsourcer also revealed it had struck an agreement to sell two real estate and infrastructure consultancy companies to WSP, one of the world’s largest professional services firms.

Capita further announced today that it had won a contract extension to provide services to Barnet Council in London worth up to £57million.

The arrangement will see the group modernise the local authority’s IT infrastructure and run human resources and accounts payable services until August 2024, as well as IT, customer and benefits services until March 2026.

It will run from September next year when the current 10-year contract ends. After the original deal was agreed in 2013, Barnet Council was nicknamed an ‘easyCouncil’ due to the high levels of services that were outsourced.

Following these separate trading updates, Capita shares climbed 8.2 per cent to 27.6p in morning trading, although their value is still around 93 per cent lower than it was five years ago.