Canadian private equity group buys Civica for £380 million

Civica, the UK software and business process outsourcing company that specialises in the public sector work, has been bought from technology investment firm 3i by a Canadian private equity group.

OMERS Private Equity, a division of Canada's Ontario Municipal Employee Retirement Systems, has acquired 3i's majority stake in the company for £380 million (Civica's management retain an undisclosed stake in the company).

Tim Magness, group marketing director for Civica, told Information Age this morning that OMERS's heritage as a body representing municipal workers makes it a good match for the company. "It's a very good fit," he said. "OMERs is a pension plan set up for municipal workers. They've got quite a good focus on the kind of companies they invest in, and are very supportive for our existing strategy."

"The investment will allow us to accelerate existing plans, which includes organic growth but also continued acquisition."

3i took Civica private in 2008 in a deal that valued the company at £218 million. It proceeded to add 11 acquisitions to the company, including expansion into the Australia and New Zealand market. 

In October last year, the Financial Times reported that the investment group was looking to either sell the company or float it on the stock exchange. According to news agency Reuters, private equity firms including Bain Capital and Apax Partners made offers for the company. 

Civica has evidently benefited from government cost-cutting initiatives. Its revenues grew 11% last year to £202 million its tenth consecutive year of growth. Profit (EBITDA) grew 9% to £38 million.

The company sells software applications, cloud service based on those applications, and also business process outsourcing services using that software. 

"We tend to focus on areas where we've got specialist expertise, and where's there's a technology enabler for the outsourcing work," said Magness. "It's not just about doing it more efficiently because we're in the private sector."

In 2011, it signed what it described as a "groundbreaking" deal with Gloucester City Council to take over its revenue and benefits administration processes. 

According to Magness, the deal prevented a number of redundancies, has improved the performance of the council's revenue and benefits operations, and the service centre is now being used by 14 other councils to meet ad-hoc requirements. 

The company's other customers include 275 healthcare providers in the UK; 75% of "blue light" services in the UK; local authorities including Manchester City Council and Hammersmith and Fulham; thousands of schools and 50 universities. It also provides the Automatic Number Plate Recognition (APNR) service to the police. 

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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