The Cabinet Office has struck a deal with Capita to set up a joint venture business based on the government’s ‘Best Management Practice’ portfolio of professional standards that has been developed by the Civil Service.
The Cabinet Office has struck a deal with Capita to set up a joint venture business based on the government's 'Best Management Practice' portfolio of professional standards that has been developed by the Civil Service.
The portfolio includes the popular PRINCE2 project management and ITIL IT service standards which are widely used by private sector companies across the world.
Capita is going to own a 51 percent stake in the new company, which will generate revenues through accreditation of exam institutes and training organisations, exams sales and publications.
Francis Maude, minister for the Cabinet Office, said that the venture will boost returns for taxpayers by £500 million over ten years and drive £600 million growth through exports.
The government believes that Capita will be able to bring commercial expertise and enable investment to develop the products and break into new international markets.
"The state is littered with potential businesses which could be bringing in revenue, creating jobs and driving economic growth. We are committed to getting Britain ahead in the global race, which is why we want to exploit these hidden gems and use the profits to protect our frontline public services.
"It's a great endorsement of the Civil Service that major companies use PRINCE2 and ITIL but business expertise and investment is needed to develop them commercially," said Maude.
"The new joint venture is expected to save taxpayers half a billion pounds over ten years - none of that would have been saved if the Government had left things how they were at the time of the General Election."
He added: "This partnership shows that business is ready to work with us in innovative ways and paves the way for many similar deals in future."
The new company, which hasn't been named yet, will accredit exam institutes and training organisations to run exams and courses, as well as act as an exam institute itself to the project and programme management portfolio.
Capita will pay the government £10 million up-front for its 51 percent stake, and then pay a further £9.4 million in each of the company's first three years.
After the third year, the government will receive a minimum annual payment of £9.4 million to maintain the levels of revenue it is currently used to. However, after these payments the new company will pay additional profits to the joint venture partners according to their stake in the business.
The Cabinet Office expects that income will triple to over £30 million per year in five years. It also expects that the company's equity value will grow rapidly, with the 49 percent government share expected to be 'worth many times more' than the full ownership of the intellectual property today - although no specific estimates were provided.
"We are thrilled to be selected as a partner in this innovative business model that uniquely combines assets and capabilities from the Government, Capita, current employees and the ecosystem of the existing and new SME service providers. The commercial, technical and innovation skills that we bring to the JV will help to create a thriving business capable of delivering real value to all parties and releasing a secure and growing income to the Government," said Paul Pindar, chief executive of Capita.
"We have detailed plans in place to stimulate and support the strong growth of the ecosystem and create a successful and sustainable JV. We will develop the current portfolio including digitising services and introducing experiential learning methods such as gaming and simulation, and broaden both the products and the markets in which they are sold across the UK and worldwide."
He added: "The JV will create a strong and growing market for learning, accreditation and examination organisations, with the majority being SMEs, and provide an excellent platform for helping to improve skills and employability. Additionally, the commercial success of the JV will not only be shared by the joint shareholders but also the employees, who will share a performance bonus pot of 5% of the JV's pre-tax profits."
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