Capita takeovers target public sector

The firm has bought SunGard Public Sector Holdings for 86m, adding 950 staff mainly based in Chippenham, Gloucester and London.

It has also snapped up hotel booking and meetings management agency BSI for 42.5m to boost its business travel division.

BSI has around 300 employees in Taunton, Nottingham, Cheadle and London. It has clients in both the public and private sector, including Marks & Spencer, easyJet and the Crown Prosecution Service.

Paul Pindar, chief executive of Capita, said: "This acquisition will make Capita's business travel offering one of the top five, by size, in the UK business travel market."

He added: "In particular, with central government looking to significantly drive down travel and subsistence costs for public sector workers, we will be in a strong position to help achieve these aims both in terms of greater overall efficiency and reduced unit costs."

It has also added the SunGard business to further increase its public sector offering.

The group - a UK business of US-headquartered SunGard Data Systems - supplies information and communications technology (ICT), radio network services and communications systems to the emergency services as well as central and local government.

Its largest clients include police forces, local authorities and the Highways Agency.

Mr Pindar said: "This is a key new area for Capita and, given the cuts in funding which the sector faces next year, one which provides real opportunities for the group to add value."

Capita is hoping to benefit from Government spending cuts as public sector clients are forced to offload work to the private sector.

But it recently said that revenue growth in the second half of 2010 had been subdued as it takes a short-term hit from the austerity drive, although it reported its bid pipeline at a record level.

Capita reported underlying pre-tax profits up 15 per cent to 163.1m in the first half of 2010 and said recently its bid pipeline stood at 4.4 billion in July.

Caroline de La Soujeole, analyst at Seymour Pierce, said today's deals were "a welcome addition enabling Capita to complement its existing offering to the public sector".