avocis has a strong position in the German speaking regions of Europe serving similar sectors to Capita’s UK-based customer management business, with high quality, long term clients particularly in telecoms and utilities.
avocis is currently under private equity majority ownership. In the financial year ended 31 December 2014, avocis had pro forma revenues of €210m (2013: €173m) EBITDA of €29.8m (2013: €23.3m) and EBITA of €25.4m (2013: €19.7m). Germany accounts for 53 per cent of its revenue, where it is the third largest customer management services provider by sales, with the majority of the remainder generated in Switzerland, where it is market leader. avocis is expected to achieve Capita’s post-tax ROCE target  in its second full year under ownership.
Acquisitions, alongside generating profitable organic growth, are a key part of Capita’s business model to both build its capabilities and increase its market reach and penetration across a growing number of sectors. Capita now operates across 11 diverse market sectors in the growing UK business process and customer management market. The acquisition of avocis enables Capita to similarly build scale in the DACH region, delivering services that it knows well and creating an additional growth platform for Capita’s wider services in this large and growing market.
The DACH region has 110m German speakers and, with Germany the largest economy in Europe, offers an excellent opportunity for growth. The region has an established business process outsourcing and customer management market but it is currently more fragmented and less penetrated than the UK, providing significant opportunity for a transformational outsourcing partner. The German outsourced customer and business process management market in 2014 was estimated to be worth €19.5bn and is expected to grow at 6 per cent annually to 2018 .
Capita entered the German market in June 2014, with the acquisition of tricontes, a niche customer management business. In January 2015 it acquired Dortmund based Scholand and Beiling, which provides customer management consultancy services and has extensive relationships across the sector. The combined acquisitions, allied to UK expertise gained in the relevant markets, places Capita in a unique position to develop opportunities in the DACH region.
Capita chief executive, Andy Parker, said: “We are excited by the opportunities in the DACH region. The acquisition of avocis provides us with immediate scale and further capabilities in this territory. avocis has a strong position in the German speaking regions of Europe with long term and growing relationships with quality private sector clients. We will be able to offer these clients access to Capita’s wider transformation capabilities and services and establish a strong platform for developing relationships with new clients in the region. We are already in discussions with a number of our existing UK clients who have European parents and subsidiaries, regarding the potential to extend current contracts and agree new ones in this region.”
The combined operations in the DACH region will form a new division and will initially be led by Vic Gysin, Joint Chief Operating Officer, alongside his existing duties. Vic will work closely with the existing strong management teams to bring these businesses together and connect with the wider Capita capabilities.
- Capita's target post tax return on capital invested in acquisitions is 15%.
- Source: NelsonHall