By Jonathan Davies

Shares at outsourcing firm Serco have plunged by 30% after it unveiled plans to raise £550m through a share sales.

Serco also cut its profit forecast and said it expects to write off £1.5bn worth of losses on contracts.

It comes after Serco was banned from bidding for UK government contracts following accusations that it was tagging people who were either dead or in jail.

"Whilst it is a bitter pill, it is better for all concerned that we swallow it now and establish a really solid foundation on which to build Serco's future," said Serco chief executive Rupert Soames.

The outsourcing firm cut its profit forecast by £20m to £130-140m.

Serco is planning to sell a number of businesses which are not central to its core strategy, which is to focus on public services.

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