Capita share price: outsourcer faces £110mn demand from Connaught investors

on Jan 24, 2014
Updated: Oct 21, 2019
Listen, Friday, January 24: British business process outsourcing and support services company Capita Plc (LON:CPI) is facing a demand for a £110 million payout from investors in the collapsed Connaught Income Series 1 fund it had operated, the Daily Mail reported.

The £118 million unregulated fund invested in bridging loans and went into liquidation in September 2012 after being suspended in March 2012. It was originally launched as the Guaranteed Low Risk Income Fund in 2008 and was managed by Capita Financial Managers until 2009 when it resigned and passed the job on to Blue Gate Capital.
The Connaught Income Series 1 fund agreed to provide a £106 million funding line to bridging lender Tiuta in April 2008. Tiuta entered administration in September 2012 after an executive had discovered a black hole in the accounts due to flawed loans.

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Investors from the Connaught Action Group, who lost millions of pounds, claim that Capita should bear the responsibility for all the losses. According to them, Capita knew there were problems with the fund, but did not inform investors. “If Capita had blown the whistle, the fund would have been closed down,” Mark Bishop of the Connaught Action Group told the newspaper.

The action group has asked the Financial Conduct Authority (FCA) to issue a ‘restitution order’ forcing Capita to compensate investors’ losses. The demand is for about £110 million, based on the initial investment and lost returns since the fund collapsed.

Capita is already facing a high court hearing for a £25 million claim by some 800 investors in the collapsed Arch Cru funds, which were also managed by Capita Financial Managers. The company is due to respond to the claims on January 27. The Financial Services Authority (FSA), the predecessor of FCA, judged that Capita had no responsibility for the fund’s underlying investments, but the investors started a legal battle, arguing that Capita owed them a common law duty of care to safeguard their money.

**Capita share price**
Capita was one of the blue chip outperformers in 2013 with its share price surging more than 36 percent for the year compared to a 14.4 percent rise in the FTSE 100 index. In today’s trading, Capita’s share price was up 0.1 percent to 1,038p as at 10:28 UTC, compared to a 0.6 percent decline in the blue chip FTSE 100 index.
According to a survey of analysts published by Analyst Ratings Network, Capita has a consensus rating of ‘hold’ and an average target price of 1,006.80p. Ten research analysts have a ‘hold’ rating on the stock, six have it as a ‘buy’, and six call it a ‘sell’. In the most recent developments, HSBC raised on Wednesday its price target for the stock to 1,060p from 1,050p, maintaining its ‘neutral’ rating. On Monday, Cantor Fitzgerald lifted its recommendation for the company to ‘buy’ from ‘sell’ and increased its price target to 1,200p from 900p.
**As of 10:13 UTC buy Capita shares at 1,042.00p.**
**As of 10:13 UTC sell Capita shares at 1,041.00p.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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