Capita is acquiring Vertex Mortgage Services for £35m on a cash free, debt free basis, subject to approval by the Financial Conduct Authority.
The acquisition strengthens Capita’s position within the third party mortgage administration market, following the purchase of Crown Mortgage Services.
Vertex employs 340 people and had an annual turnover of £22.9m in the financial year ending 31 March 2015, with pro forma earnings of £1.3m. It is forecasting earnings of £2.7m on turnover of £33.1m in its current financial year.
Due to synergies and growth expectations, Capita expects the acquisition to achieve its target return on investment of 15 per cent in 2017.
Andy Parker, Capita’s chief executive, stated that the group’s ambition is to become the mortgage processing partner of choice for existing mortgage providers and challenger banks.
“The acquisition of Vertex MS is another key step towards achieving this goal,” he added.
Capita commented that the mortgage market is facing “significant regulatory and business challenges” and therefore it has identified huge potential in the UK business process outsourcing mortgage market, which BPO analyst firm Nelson Hall has estimated to grow to £400m in 2018.
“This is a market facing continuous regulatory change and changing customer behaviours, and with Capita’s breadth of services and expertise we are well placed to help organisations with these challenges,” said Mr Parker. “This market therefore offers significant growth potential for Capita.”
The acquisition includes subsidiary companies Vertex Financial Services and MS Canada -providers of mortgage software in the UK and Canada - along with Jessop Fund Managers - providers of unit trust and pension administration services in the UK.
peter.walker@ft.com
