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Capita and Provident falls hit Woodford and Barnett

Capita and Provident falls hit Woodford and Barnett

Shares in Capita (CPI) have slumped after the outsourcing group lost its contract to administer Prudential's life and pensions business.

The shares fell to the bottom of the FTSE 250, down 5.2%, after Prudential said it had signed a 10-year deal with Tata Consultancy Services, who will now administer the business.

Prudential had outsourced its life and pensions administration to Capita for 10 years. Capita said the contract was expected to contribute revenue of around £80 million for the last financial year.

The contract will switch from Capita to Tata at the end of July, although Capita will continue to administer Prudential's international business. 

The news will be another blow to fund managers Neil Woodford and Mark Barnett, who are big backers of the stock. Woodford's Woodford Equity Income is the largest fund investor in Capita, closely followed by Barnett's Invesco Perpetual High Income and Income funds.

Provident woes worsen

Adding to Woodford and Barnett's woes was another slump in the shares of Provident Financial (PFG), as the embattled doorstep lender said its consumer credit division was expected to lose £120 million in its 2017 financial year.

The shares were down 4.1% at 882.6p, joining Capita at the bottom of the FTSE 250.

Provident Financial warned in August that the division was likely to lose between £80 million and £120 million, amid problems sparked by restructuring.

That warning, together with the scrapping of its division, departure of its boss and revelations of a Financial Conduct Authority investigation, sparked one of the biggest one-day falls in FTSE 100 history, with the shares down 70%.

Provident has now confirmed the loss will be at the upper end of that range.

'This reflects a lower than expected range of reconnection through the fourth quarter with those home credit customers whose relationship had been adversely impacted following the poorly executed migration to the new operating model in July 2017,' the company said in a trading update.

The FTSE 100 meanwhile edged into positive territory, up 14 points, or 0.2%, at 7,783, boosted by the pound's fall as inflation fell to 3% in December, down from 3.1% in November, a six-year high.

The pound fell to $1.377 against the dollar on the news.

Among the day's risers were JD Sports (JD), which jumped to the top of the FTSE 250 after the sportswear retailer reported full-year profits were likely to be ahead of market expectations.

Close behind was Hunting (HTG), up 5.9% at 646.5p after upgrades and raised price targets from analysts at Morgan Stanley and Canaccord Genuity for the energy services company.

Among 'small cap' stocks, Medica (MGPM) was a heavy faller, down 12.7% at 169.4p on a profit warning.

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