Capita today announced that it has sold its Education Software Solutions (ESS) business to private equity firm Montagu for £400m.
The announcement comes a few weeks after the FTSE 250 firm confirmed that it was in exclusive talks with the financiers.
Shares in Capita rose 3.5 per cent on the back of today’s announcement, which will see Montagu pay £298m on completion, which is expected in early 2021.
Under the transaction, the private equity group will also take of £57m in liabilities associated with the division.
It will pay the final £45m once its investment in school payments firm Parent Pay has been approved.
Following the successful completion of both investments, ESS will become part of the Parent Pay Group.
Capita said that proceeds from the sale would be used to strengthen its balance sheet.
Back in October Bloomberg reported that the firm had received a number of offers for the division, but these had fallen short of an initial valuation of £500m-£700m.
Chief executive Jon Lewis said: “We are pleased to have agreed the sale of ESS to Montagu Private Equity after a comprehensive auction process.
“ESS is a business that Capita originally bought for £10m so we have created significant value over 25 years of ownership.
“We announced our intention to sell ESS earlier this year, as part of our strategy to simplify and strengthen Capita.”
Read more: Capita finance chief steps down
The sale comes at the end of a rough year for the company, with shares falling over 80 per cent at one point.
In August, the company said its turnaround plan had been torpedoed by the lockdown, but shares strengthened again last month.