Outsourcing company Capita has launched a cash call to raise £701m from investors to shore up its finances as it reported a £513m loss for last year.

The debt-laden company, which provides a wide range of public services from operating the London congestion charge to collecting the BBC licence fee, is issuing 1m new shares at 70p in a heavily discounted three-for-two rights issue. It said the £662m raised after fees to advisers would fund its turnaround plan.

Its annual loss ballooned from £90m in 2016, owing to problems with several contracts, writeoffs and restructuring costs.

Capita’s shares slumped in January when it issued a profit warning, suspended its dividend and said it would need to tap investors for cash. News of the fundraising sent the shares 10% higher on Monday, to 176p, but they are still down 70% over the past year.

The firm’s new chief executive, Jonathan Lewis, who took the helm in December, has embarked on a complete overhaul of the business.

Lewis dismissed any comparison to Carillion, the services and outsourcing group that collapsed into liquidation in mid-January.

“I get frustrated with that comparison – we are a completely different business,” Lewis told the Press Association. “We have £1bn in liquidity, strong cash flow and a new strategy with investor support. We are not in PFI contracts and have nothing like the risk profile.”

Capita, which employs 70,000 people around the world, reiterated that it expects to make underlying pretax profits, excluding restructuring costs, of £270m to £300m this year. It said its trading in the first quarter was consistent with this guidance.

Lewis said in a statement: “Today we have announced a new strategy to simplify and strengthen Capita. The rights issue is a key component of this new strategy.

“There is a lot to do, but I am confident that the plan is clear and prudent.”

Capita said it had been hit by cost overruns on a contract to deliver NHS England’s primary care support services, penalties and extra costs related to the Transport for London congestion charge contract and contract disputes in relation to its deal with the Co-operative Bank.

In recent years it has developed bespoke software for clients that often became obsolete quickly and led to writeoffs.