Jon Lewis was parachuted in as Capita chief executive in December
Capita’s boss plans to raise more than £700million from investors as part of his bid to rescue the outsourcer.
Jon Lewis, who was parachuted in as chief executive in December, said the cash from the rights issue would help rein in debt and simplify the company’s sprawling structure.
It came as Capita revealed losses had widened to £513million in 2017.
Lewis, a turnaround specialist, blamed its ‘self-inflicted’ woes on mounting debt, wasteful spending and a spate of acquisitions that made the business too unwieldy.
The 56-year-old said: ‘Capita needs an injection of discipline.
Ten IT Departments
Capita’s business was so complicated that at one time it had ten separate IT helpdesks to deal with tech queries from its own staff.
Bosses yesterday revealed a series of bungles which cost millions. Different parts of the business had no idea what others were doing and even ‘competed for the same work’ in some cases.
Duplication was common, with the various arms charging each other for services and spending ‘considerable effort negotiating with ourselves’.
There are 35 customer service IT systems. And different parts of the firm bought their own supplies instead of grouping together to get lower prices.
‘Don’t underestimate the magnitude of the change taking place.
‘It is root and branch.’
Lewis said Capita’s different arms would pool more resources to save money, use data to improve efficiency and introduce systems to make sure they all took the same approach to contracts.
Up to £500million will also be ploughed into the most promising areas of the business, including software and data analytics.
Shares shot up more than 13 per cent, or 21p, to 180.8p after the announcements.
It revealed its losses last year ballooned to £513.1million, up from £89.8million in 2016.
This was mainly due to £851million of one-off costs, including anticipated write-downs of contracts and businesses bought under previous management.
Capita holds numerous government contracts, including running the London congestion charge, Jobseeker’s Allowance helpline, teachers’ pensions and electronic tagging services for the Ministry of Justice.
But it ran into trouble after taking on projects with wafer-thin margins, leaving little room for manoeuvre when things went wrong.
In its announcement yesterday, Capita said recent turmoil had led some of its clients to axe contracts.