Finland is the country for Logica

Logica seems to have taken to heart the lyrics from the memorable Fisch Schlapping Dance from Monty Python’s Spamalot: “Finland, Finland, Finland. That’s the country for me!”  

Just yesterday they announced a proposed joint venture with Tapiola Data, the (assumed) IT arm of Finnish financial services business, Tapiola Group (see here). And today, Logica has announced it is to dispose of its 50% stake in Finnish payroll outsourcing firm, Silta Oy, to private equity company Sentica Partners. Silta Oy is a venture with Finnish insurance companies Varma Mutual Pension Insurance Company and Sampo Oyj. No details were disclosed other than that the gross asset value is estimated at £1.1m. The rationale for the disposal is for Logica “to focus on its core competencies …  around HR Business Process Outsourcing.” Logica is making a big play in HR BPO, most recently displacing troubled Xchanging at BAE Systems (see here), a deal we think they will find ‘challenging’ on the margin front.

The Nordic region has not been a happy place for Logica of late. The company established a beachhead in the region in 2006 (back in Martin Read’s time), with the near-£900m cash and share acquisition of Sweden’s most successful mid-cap IT services firm WM-Data. WM-Data got some two-thirds of its revenues from its domestic market, the rest from other Nordic countries, including Finland. The deal had the stated strategic objective of “securing a fourth major profit generator for the group in Europe”. Logica’s Swedish business lost £31m last year.