
Link Group has made a major acquisition in the UK which expands its existing global share registry business and given it a big leg-up in its recently entered Australian funds administration business. Details are expected to be announced in Australia today (June 26).
The UK-based Capita PLC, told the London Stock Exchange (LSE) late Friday, Australia and NZ time, that it had reached an agreement with Link to sell its Capita Asset Services division for Stg 888 million pounds (about A$1.5 billion) in cash.
For Link, which has been cashed up and on the acquisition trail for the past two years since it took over SuperPartners in Australia, which has turned out to be a surprisingly good and smoothly transitioned arrangement for both parties, the Capita deal increases the scope of its businesses by more than 50 per cent. For instance, Capita Asset Services has given Link 3,000 more employees compared with its current 4,000-odd.
John McMurtrie, the managing director of Link, presided over the final arrangements of the Capita deal in London late last week. It is expected to be finalised from an operational perspective in the fourth quarter of this year. It is also expected to include a hefty amount of borrowing on Link’s part, which is likely to be revealed to the ASX today.
The LSE announcement by Capita said the deal was subject to certain regulatory approvals and included a pension fund pay-off. The cash proceeds from Capita’s perspective would go to reduce the troubled company’s debt.
Andy Parker, the holding company’s chief executive, said: “We are delighted to announce the sale of the Capita Asset Services businesses to Link Group. In the Autumn of last year we set out a strategy to simplify and streamline Capita by repositioning the Group and refocusing on delivering technology-enabled business and customer management solutions that make business processes smarter and deliver better customer service.
“This disposal is an important step in realising this strategy. We have achieved an attractive price and the reduction in leverage is significant and ensures that Capita can fully focus on the pursuit of what it does best: continuing to deliver outstanding services to our clients and their customers…”
Link is best known in Australia for its share registry services and its super fund administration, plus information technology offerings. It has, however, recently diversified into funds manager RE and admin services through the acquisition of White Outsourcing.
In NZ Link provides administration services to about 80,000 KiwiSaver and superannuation scheme members. Link took over the Aon NZ super admin business in 2015, costing the deal at about A$700,000.
The Capita deal means an expansion offshore in funds manager admin services too.
Greg Bright is publisher of Investor Strategy News (Australia)