Capita swoops on Vertex in second mortgage move

Business processes outsourcing firm Capita is to buy Vertex Mortgage Services for £35m.

The deal, which is subject to approval by the Financial Conduct Authority, is to be made on a cash free, debt free basis.

Vertex MS, which is based in London and employs 340 people, specialises in providing commercial and residential mortgage processing and administration software to retailers and high street banks.

Capita said that due to synergies and growth projections, it expected the acquisition to achieve its target return on investment of 15% in 2017.

The deal marks Capita’s continued expansion into the commercial and residential mortgage servicing sector.

Last year, the London-based Capita purchased Crown Mortgage Services for that firm’s retail mortgage administration capabilities.

“This is a market facing continuous regulatory change and changing customer behaviours, and with Capita’s breadth of services and expertise we are well placed to help organisations with these challenges” said Andy Parker, Capita’s chief executive.

“Coupling Vertex MS’s specialist software with Capita’s experience in business process and customer service transformation will position us uniquely in the market. The acquisition will allow us to deliver real value for mortgage providers, respond to the needs of existing providers and new entrants, and enhance our ability to service large-scale clients.”

According to Deloitte, just 5% of the mortgage servicing market is outsourced. Capita believed the market would grow to £400m in 2018.

The latest acquisition included subsidiary companies, Vertex Financial Services and MS Canada, which provide mortgage software in the UK and Canada, and Jessop Fund Managers, providers of unit trust and pension administration services in the UK.