Capita closing in on public WAN player Updata

Outsourcing rich kid Capita tables MASSIVE bid - sources


Top brass at Surrey-based broadband network services player Updata Infrastructure UK are understood to be mulling over a leading offer from Capita, sources have told us.

As The Channel revealed last November, public sector player Updata confirmed it was locked in "active" discussions with a bunch of interested parties.

People familiar with the matter reckon that a number of private equity firms were involved in those negotiations but an eye watering bid tabled by acquisitive outsourcing monster Capita put it in pole position.

"It is north of £80m, an immense figure," said one of our contacts. The money on the table from those in venture capitalist community was believed to be closer to £50m.

The tech firms already partner, and are working together on providing improved web access to corporate offices, school, libraries and remote site in North Ayrshire. The five-year deal is valued at £3m.

In Updata's results for fiscal '13 ended 30 June, organic revenues grew 40 per cent to £33.2m, 65 per cent of which were recurring, albeit down from 78 per cent in the previous year.

Staff numbers increased 76 per cent - mostly in operations and service delivery - to 151, leading to a 26 per cent hike in admin expenses to £11.6m.

In the director's report, Updata said this was due to "higher business volumes, couple with increased technical complexity surrounding the services that the business now offers".

Despite this, EBITDA - the term used by most acquisitive firms in tech - increased 41 per cent to £6.2m. Operating profit was £3.7m, versus £1.01m in the year to June 2012.

Updata designs and builds wireless area networks for local councils that connect the various sites. It also has a unit that sells managed and infrastructure services.

It list of clients includes county councils in Kent, Essex, Hertfordshire an the Welsh Assembly. It was one of 12 accredited suppliers involved in the Public Services Network.

The total value of contracts won stood at £111.7m, up on the £27.7m in fiscal '10.

San-Francisco-based PE firm LMS Capital forked out £6.2m for a 53.3 per cent stake on Updata four-and-a-half years ago to prop up an MBO.

Capita refused to comment and Updata was unavailable to comment at the time of writing. ®

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