October 19, 2016 / 10:45 AM / in a year

Top Capita investor says confident dividend safe, no equity raise needed

LONDON, Oct 19 (Reuters) - A top-five shareholder in outsourcing group Capita said on Wednesday it was confident the company’s dividend was safe and fresh equity will not be required, after a meeting with management following a profit warning last month.

Capita told investors on Sept. 29 that delayed decision-making by its customers in the wake of Britain’s vote to leave the European Union would hit its 2016 profits, sending its shares down sharply.

In a monthly update on its investment performance, Woodford Investment Management- Capita’s fourth-biggest investor according to Reuters data - said it had met the firm and was reassured about its outlook.

“Although the market is clearly worried about the sustainability of Capita’s dividend and the prospect of a dilutive rights issue, we are confident that the dividend is safe and that an equity issue will not be required,” Portfolio Manager Mitchell Fraser-Jones wrote.

“Nevertheless, this was clearly a disappointing update from the business but, as is so often the case in these situations, the market’s reaction looks disproportionate,” he added. (Reporting by Simon Jessop, editing by Sinead Cruise)

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