London-listed Capita is preparing to offload AXELOS, a highly profitable professional qualifications division it co-owns with the UK government, EducationInvestor Global can reveal.
This publication has learnt that Capita, the outsourcing giant, has hired Barclays to prepare AXELOS for auction, which the bank will launch in the coming months.
The planned sale of AXELOS underscores Capita’s commitment to clearing debt from its balance sheet via divestments and comes just months after the firm sold its Education Software Solutions unit to Montagu Private Equity in a deal valuing it at more than £350 million.
AXELOS, according to sources, books annual earnings before interest, tax, depreciation and amortisation (EBITDA) of around £30 million. Based on this figure, an enterprise value of £300-450 million could be attributed to AXELOS, a source said.
The company’s accounts for the year ended 31 December 2019 show that AXELOS’ revenues totalled £47.6 million, while pre-tax profit stood at £25 million – a margin of over 50%. Its strategic report for this period notes, however, that “Covid-19 has had a material impact on trading volumes in 2020”.
Founded in 2013 under a joint venture between Capita and the British Cabinet Office, AXELOS develops, manages and operates professional qualifications and certifications in methodologies formerly owned by the Office of Government Commerce.
Among AXELOS’ best-known certifications are ITIL, for IT service management; PRINCE2, for project management; RESILIA, for cyber resilience; and MSP, for programme management.
Capita reportedly owns a 51% controlling stake in AXELOS, while the Cabinet Office holds the remaining 49% of the company. It is understood that Barclays will seek to find a buyer for only Capita’s stake.
AXELOS will garner interest from private equity, sources said, in which funds will be enticed by the company’s high margins and reputed certification brands.
AXELOS is led by chief executive Mark Basham, who cut his teeth in the IT sector and specialises in international growth and turnarounds.
In the eyes of public investors, AXELOS’ parent company Capita over the past five years has fallen from grace.
Once worth more than £10 billion (in 2016, when its share price exceeded £11) Capita’s market cap now sits at around just £675 million, trading at just 40.15p per share.
In an effort to appease shareholders by relieving some of its hefty debt burden under a wider turnaround plan, Capita has pursued a number of divestments – one of which, its Education Software Solutions division, was revealed by this publication last June.
A spokesperson for Capita was unable to comment at the time of publication.
Barclays could not be reached for comment at the time of publication.
Date published: 16 February 2021