Capita investors were delivered a dose of good news this morning, with shares rising around six per cent after last week's mammoth sell-off.
The change in fortunes came as one of Britain's largest fund managers blasted Capita for "flouting basic corporate governance rules" and urged it to "not repeat the mistakes of the past".
Shares in the FTSE 250 firm, which has a broad range of contracts ranging from the TV Licencing to fund management services, plummeted around 50 per cent, after it announced a major operational shake-up, warned on profits and cancelled its dividend.
Almost £1bn was wiped off Capita's market capitalisation as the firm also announced plans were in place for a mammoth £700m rights issue.
Today Royal London welcomed the "honesty and transparency" of Capita's announcement last week.
"We believe this was preventable and have been privately raising concerns about Capita’s weak governance with the firm for a number of years, and voting against many resolutions on director re-elections and pay consistently since 2014," said Royal London head of responsible investment Ashley Hamilton Claxton.
Until recently, Capita’s board flouted one of the basic rules of the corporate governance code, with a small board primarily comprised of management insiders. The result was a board that lacked the independent spirit to rigorously assess whether the company was making the right long-term decisions.
Our concerns about governance were compounded by the complexity of the underlying business and the company’s acquisition strategy. Capita’s approach to remuneration also left something to be desired, with major losses in 2013 being excluded from the profit figures used to assess the bonuses paid to executives at the firm.
She continued: "The sea change in the board over the past 18 months has been welcome and has addressed the key issue of independence. It will be up to the new chairman and the board to ensure that Capita does not repeat the mistakes of the past and that its strategy is fit for purpose during a particularly turbulent time for the outsourcing sector."
Royal London owns a 0.44 per cent stake in Capita. Capita has been approached for comment.