Rentokil acquired City Link in 2006, but City Link has lost money since 2007, including £26m in 2012.
It has struggled in the face of weakening demand for its services from small businesses.
It is now being offloaded to restructuring specialist Better Capital, who are expected to invest £40m into the business.
Better Capital has recently invested in fashion retailer Jaeger and double-glazing firm Everest.
City Link will continue to be run by its existing management team, Rentokil said in a statement.
Rentokil chief executive Alan Brown said: "I believe City Link has now turned the corner after five years of substantial losses."
But he said Rentokil was offloading the business to focus on its core pest control and hygiene operations.
Its shares closed 0.6% down, having been up more than 4% in morning trading, following the news.
Pest control company Rentokil Initial has sold its parcel delivery firm City Link for £1, after years of losses.