The Department for Business, Innovation and Skills (BIS) has announced, following the completion of a competitive sales process, that Capita plc is the successful bidder to acquire the assets of Constructionline for £35m on a cash free, debt free basis.
Constructionline is one of the UK’s largest procurement and supply chain management services and was set up by BIS (formerly the Department of the Environment, Transport and the Regions) initially for public sector contracts. It aims to reduce the annual cost (currently £165m) for construction industry buyers and suppliers, particularly SMEs, of repeatedly providing pre tender information. Capita was awarded the original concession to run Constructionline, by the Government, in 1998 and was successful in the subsequent re-tenders.
As the new owner Capita will be able to further invest and commercialise Constructionline, delivering enhanced services to both the private and public sectors. Capita will extend the range of value added procurement services it offers contractors and suppliers. Initially focusing on construction, it will also develop similar services for other industries. To support this expansion Capita will invest in a new IT system which will make the business more effective and agile and improve efficiency, bringing more automation to the application process.
Andy Parker, Capita Chief Executive, said: “Capita has run Constructionline successfully for more than 16 years, building one of the largest buyer and supplier service organisations of its kind, helping buyers achieve compliance and returning regular income to BIS and the tax payer. But under public sector ownership, there have, understandably, been a number of constraints to the service reaching its full potential.
“In spite of its success to date, Constructionline currently provides its services to less than 15 per cent of the addressable suppliers in the construction industry, a market estimated to be worth more than £30m annually. We believe that we can accelerate our penetration of both this and new market sectors and with a broader and more value added service we will be able to grow Constructionline rapidly. We therefore expect to increase revenues by 40 per cent over the next two years and achieve the company’s acquisitions target return on invested capital.”