Buying growth can be an expensive business and Capita's desire to raise more funds to support an acquisition-fuelled growth strategy suggests progress on organic expansion is tough and makes its shares less attractive.
IC TIP:
Hold
at
680p
So far this year Capita has spent £91m hoovering up bolt-on acquisitions like payroll processor Bluefin, and the employee health benefits arm of Aviva UK, but it doesn't plan to stop there. Accompanying details of a placing of 40m shares or 6.5 per cent of existing share capital, which will raise £274m, the company reiterated that "acquisitions play an integral role in Capita's growth". Indeed, the majority of the 17 per cent growth in first quarter sales was down to last year's acquisitions.