Capita devours Updata Infrastructure in £80m bite

Strategic alliance with network services provider represents next step in ongoing expansion

Services giant Capita has bought Reigate-based network services and connectivity specialist Updata for £80m in cash.

Andy Parker, chief executive of Capita, said the debt-free acquisition will strengthen Updata's networking capabilities, currently delivered from six offices across the UK with 160 staff.

"Updata has a strong reputation across the public sector as a provider of IT networks that help schools, councils and health bodies deliver improved services," he said in a statement.

The duo has enjoyed a strategic alliance when it comes to Scottish contracts in West Dunbartonshire, North Ayrshire, Fife, and East Lothian since 2011, with Updata expecting £5.6m in operating profit from its £41.8m turnover in its fiscal year to 30 June.

They also work together on the new £325m, nine-year, 4,600-site Scottish WAN (SWAN) public services network framework contract.

"For the 12 months to 31 December 2015, Capita expects Updata to generate operating profits of circa £12m on revenues of circa £74m," according to Updata, which will now be part of Capita's IT Services division.

In September, Derby City Council selected Updata to provide a PSN-ready WAN for its 72 corporate sites as well as managed services for 60 schools in Derby – a deal expected to save the council £450,000 over three years.

However, Richard Bennett, managing director of Updata, said the company had managed to earn the trust of some large and progressive local authorities but had been limited as an SMB.

"As an SME, we realised that we would struggle to continue our growth in terms of capabilities and market opportunities," he said. "Being part of the Capita family provides both of us with opportunity."

Capita published its annual report for 2013 yesterday. According to Parker, its UK market for customer and business process management remains "very encouraging" with juicy opportunities in both public and private sectors.

The firm trumpeted its "strong start" to 2014, which included £588m of new wins thus far, with the SWAN deal a major highlight.

Last year, Capita signed £3.3bn worth of contract wins – down from £4bn in 2012 – with 19 per cent being extensions, including its largest ever deal – £1.2bn over 10 years, with O2. It also spent £271m on 13 acquisitions in 2013 alone.