Constructionline to be acquired by Capita in £35m deal

ConstructionlineCapita has been revealed as the successful bidder to acquire the assets of procurement and supply chain management service Constructionline for £35 million on a cash free, debt free basis.

Through its database of over 23,000 companies, Constructionline cuts out red tape for the construction industry by providing a verified list of suppliers who have already passed industry checks, saving time and money.

UK business minister Matthew Hancock said today that Capita purchased the business following an open competitive sales process which launched last summer.

Capita’s bid met the Department for Business, Innovation & Skills’ (BIS) objective of ensuring a safe and efficient continuation of service to existing Constructionline customers, whilst achieving the highest price for the business.

Matthew Hancock said: “Construction benefits from the quality-assured, time-saving service of Constructionline and this sale aims to cut red tape further by freeing it of Government ownership. Capita now has an exciting opportunity to expand its valued services to meet the needs of the construction industry and especially small and medium sized businesses.

“Commercial ownership will enable the business, which has built up a strong reputation for reducing duplication and tender costs within the sector since its establishment in 1998, to achieve its full potential.”

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.”

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