Kapiti Ltd, the fast-growing Slough, Berkshire banking software specialist, has shown up in many publications’ forthcoming issues lists over the past few weeks, but as the company said back in February (CI No 2,359), any flotation was still up in the air and depended on market conditions. Those are deteriorating rapidly for new issues, so the company has decided that discretion is the better part of valour and has agreed instead to be acquired by Misys Plc, which is offering UKP40m in shares with a partial cash alternative for Kapiti, and has irrevocable acceptances from holders of more than 90%. Kapiti did UKP3.2m pre-tax in 1993 – up from just UKP900,000 in 1992 and UKP100,000 in 1991, although this reflects two halves of losses as the company absorbed and reorganised its Aregon Group Ltd acquisition. Sales in 1993 were UKP29.5m, and it has net cash of UKP4.6m so it looks fully valued at the bid price, especially since Kapiti’s UKP30m annual sales are coming out of a global market it estimates to be worth only UKP200m a year – although it is growing. An attraction is that 30% of turnover is continuing business in the form of support charges, and over 50% is derived from existing customers by varying means. Misys, which wants Kapiti because it extends its packaged financial software reach into the banking world, is making a two-for-13 rights issue at 425 pence a share – against a price in the market of 510 pence to raise UKP25m for the cash element in the agreement, which will require approval of its shareholders.
