Capita Group PLC
11 April 2000
Capita enhances private sector offering
through investment in shareholder services
* Acquisition of IRG Plc ('IRG'), the UK's 3rd largest share
registration services company, for £100 million.
* £2.5 million investment in www.myshares-online.com ('myshares-
online'), a new company offering employee shareholders online
information and administration services.
* Placing of 6.7 million new ordinary shares at £15.10 per share
to raise £99.6 million net of expenses principally to fund the
acquisition of IRG.
Rod Aldridge, Executive Chairman of Capita commented:
'The acquisition of IRG and our investment in myshares-online
considerably enhance Capita's service offering to the private
sector and will establish a key platform for further growth in
financial and human resource services. The two businesses are
complementary and will benefit from each other's customer bases,
market knowledge and skill sets in the provision of employee share
administration services. Both businesses will also benefit from
Capita's extensive IT, business process, HR and customer support
services expertise. IRG and myshares-online enjoy an outstanding
private sector client list and this provides Capita with further
strong building blocks for our continued expansion into the
private sector market'.
For further information:
The Capita Group Plc 020 7799 1525
Paul Pindar, Chief Executive
Shona Nichols, Group Marketing Director
Credit Lyonnais Securities 020 7588 4000
HSBC Investment Bank plc 020 7336 9000
Issued by Hogarth Partnership 020 7357 9477
John Olsen / James Longfield
11th April 2000
Acquisition of IRG Plc and investment in
The Capita Group Plc ('Capita'), the UK's leading professional
support services organisation, today announces the acquisition of
the entire interests in the share capital of IRG Plc ('IRG') for a
total consideration of £100m. It also announces that it has
entered into a subscription agreement to invest £2.5 million in
www.myshares-online.com ('myshares-online') for a 31.5% holding in
IRG Plc is one of the leading share registration businesses in the
UK providing services to over 1,200 companies ranging from FTSE-
100 to AIM and OFEX constituents. The business also delivers
employee share scheme administration, trustee services and
The purchase consideration for IRG of £100 million comprises £56.1
million payable in cash, £2 million in new ordinary shares in
Capita and £41.9 million in guaranteed loan notes issued by Capita
IRG achieved an audited profit before tax of £3.33 million in the
year ended 31 March 1999 on turnover of £26.59 million. In the
year ended 31 March 1999, the owners, who will no longer be
associated with the business, received a total remuneration of
£5.19 million. Net assets as at 31 March 1999 were £6.03 million.
IRG has grown its client base both organically and through
acquisition to a total of over 1,200 companies quoted or dealt on
the London Stock Exchange. The business has increased margins
through gaining efficiencies and by vertical integration to
provide the client base with additional higher value services,
including employee share scheme administration, trustee services
and security printing.
IRG's client base and service offering are a valuable addition to
the Capita Group. IRG's core administration processes and
customer services fit ideally alongside Capita's existing services
and skills, but also have the advantage of contributing an
extensive private sector client base. The company will be renamed
Capita IRG, thus increasing the brand awareness of Capita across
the private sector which in turn will help Capita to provide other
outsourcing services to IRG's client base. Capita can introduce
further efficiencies into IRG's business, enhance the IT delivery
of their existing services and further develop their additional
Commenting on the acquisition of IRG, Paul Pindar, Capita's Chief
'We are delighted to welcome IRG into the Capita fold. It is a
well established company with an extensive, stable private sector
client base and enjoying high quality, recurring revenues. It
fits excellently alongside our existing services and skills. The
business has quadrupled in size in the last five years whilst
significantly increasing operating margins. The company has
demonstrated that it is well positioned to respond to current
market demand, especially the increase in private shareholder
activity which we believe will be a continuing trend.'
Myshares-online.com is a recently established company focused on
employee share scheme services and is the developer of the UK's
first internet tool for employee shareholders.
Capita will invest £2.5 million for a 31.5% holding of myshares-
online share capital. 3i Group, Europe's leading venture capital
investment company, is also backing the company with an investment
of £1.5 million for a 13.5% holding.
Myshares-online was founded by Capital Strategies Ltd, a company
with a strong record in advising on employee equity participation.
It was established to capitalise upon the anticipated increase in
employee share schemes that will result from the UK Government's
new policies designed to double the number of companies with
employee share owners. The Government recently announced the
introduction of a tax-advantaged new all-employee share scheme
from July 2000, the phasing out of profit sharing schemes and new
CGT rules for employee shareholders. This will result in a major
replacement programme, with companies bringing their present share
schemes under one roof and seeking more efficient administration
and communication tools utilising current internet technology.
Nigel Mason, the CEO of myshares-online, is a special advisor to
the Government on the design of the new all-employee share plan.
To establish itself in the market place and to provide an
immediate platform for future growth, myshares-online recently
acquired the UK's leading share plan administration software. The
product, called 'Rolls', is used by 35 of the FTSE-100 companies
and 45 of the FTSE-250. Previously owned by the Institute of
Chartered Secretaries and Administrators ('ICSA'), the acquisition
brings with it a valuable client base and good technical and sales
teams. ICSA is a shareholder in myshares-online and will continue
to endorse Rolls as a leading tool for share plan administration.
Myshares-online is developing a 'personal portal' for employee
shareholders which will be launched later this year. Licensed to
major corporates as an employee communication and administration
tool, the internet service will provide employees with a
comprehensive picture of, and ability to manage, their equity
entitlements. Users will effectively be recruited in bulk via
major corporate employers and should be loyal regular users of a
Myshares-online and IRG have agreed that IRG will provide the
outsourced administrative services for both new and, where
practicable, existing customers of myshares-online.
Capita will be represented on the Board of myshares-online by Paul
Pindar, Capita Group's Chief Executive, and David Kaye, a Director
of IRG. The business is expected to be profitable in its second
year, with revenues generated from annuity, consultancy and
Commenting on Capita's investment in myshares-online, Paul Pindar
'This is an exciting opportunity for Capita bringing benefits to
the Group not only through investment in a highly attractive
business and market opportunity, but also from the combination of
Capita's extensive IT skills and share administration processing
services from our newly acquired business IRG. Together myshares-
online and IRG will jointly develop employee share scheme services
that meet the growing expectations of corporate clients and
Vendor Placing and Cash Placing:
Under the terms of the acquisition of IRG, Capita is issuing
3,420,449 new ordinary shares at £15.10 per share ('Vendor Placing
Shares'), £41.9 million in Loan Notes and 132,450 new ordinary
shares to certain vendors of IRG shares ('Consideration Shares').
A further 3,279,551 new ordinary shares are being placed on behalf
of Capita at £15.10 per share ('Cash Placing Shares') raising
£49.5 million in cash (before fees and expenses) principally to
fund the redemption of the Loan Notes and the cancellation of
outstanding options over unissued IRG shares.
Agreement has been reached with Credit Lyonnais Securities and
HSBC Investment Bank plc for the placement of the Vendor Placing
Shares and the Cash Placing Shares with institutional and other
investors at a price of £15.10 per share credited as fully paid.
The Vendor Placing Shares, Cash Placing Shares and the
Consideration Shares, which represent approximately 3.3 per cent.
of the present issued share capital of Capita, will rank pari
passu in all respects with the existing ordinary shares of Capita,
save that these will not qualify for the final dividend of 2.6p
per share (to be declared at the forthcoming AGM) payable on 27
April 2000 in respect of the year ended 31 December 1999.
Application will be made to the London Stock Exchange for the
Vendor Placing Shares, the Cash Placing Shares and the
Consideration Shares to be admitted to the Official List and this
is expected to take place on 18 April 2000.
Notes to Editors:
Capita Group Plc is one of the largest and fastest growing
professional support services organisations in the UK, operating
in a sector forecast for continued rapid growth. Capita is a first
choice partner in the provision of innovative business support
services. The company is dedicated to enhancing quality and value
in its customers' business and their customer facing operations.
It draws on a wide base of professional expertise to generate, and
successfully implement, tailored solutions. Capita's capability
spans leading edge customer service and contact centres; human
resource services; systems and strategic support; software
services and property consultancy. With over 6,700 people
operating from over 100 UK sites, Capita is quoted on the London
Stock Exchange and is a FTSE 100 company with an annual turnover
in excess of £320 million and a market capitalisation of over £3
Capita Group's website address: www.capita.co.uk