Capita gets multi-million pound boost from Carillion conqueror

A US hedge fund which made millions from the demise of contractor Carillion is backing the turnaround of British outsourcing giant Capita.

Coltrane Asset Management has built a three per cent stake in Capita worth around £41m, according to a filing yesterday.

Capita, which employs 73,000 people worldwide and whose contracts include providing critical support to HM Revenue & Customs and operating Londons congestion charge, has endured a miserable last 12 months.

Billions have been wiped off Capita's stock market valuation with shares collapsing to a 20-year low earlier this year. Annual losses hit £513m after Capita took a painful £851m write-down to its contracts.

It is understood Coltrane's investment comes after Capita execs took its investor roadshow to the US last week in the hope of wooing investors from across the Atlantic.

Capita boss Jon Lewis has pledged to simplify the FTSE 250 firm's sprawling operations and return it to profitability.

Read more: Ministers can learn from Capitas candid chief

Carillion

Coltrane made £4m betting against Carillion, which failed in January after being faced with its own enormous contract write-downs, facing mammoth debts and being unable to secure funding for a £300m cash black hole.

The US fund currently has a large bet against another UK outsourcer, Mitie, holding a 2.1 per cent short position according to regulatory filings. It also Royal Mail's second-largest short with a 0.76 per cent bet against the postal giant worth around £47m.

Capita is not the only British outsourcer Coltrane is supporting, however. It is the largest shareholder in Interserve, owning 25 per cent of the company's shares, according to its annual report.

Both Interserve and Capita were two of London's biggest stock market losers this morning. Capita fell around five per cent after shares corrected in the wake of yesterday's deeply discounted rights issues. Interserve was 3.8 per cent lower after the Financial Conduct Authority announced it had launched an investigation into the handling of inside information and its disclosures to the market over its exit from the energy-from-waste business.

Coltrane has been approached for comment.

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