Legal & General acquires full ownership of CALA Homes

Legal & General Capital has taken full ownership of CALA Homes in a deal that values the housebuilder at £605 million.

The insurance and investment group has paid £315m to Patron Capital Partners to acquire the 52.1% of CALA it did not previously own

Legal & General said the business has performed strongly under its joint ownership with Patron Capital Partners, with revenues growing threefold from £241m in 2013 to £748m in 2017, and profits growing at a CAGR of 12% over the last three years.

CALA Homes had attractive growth prospects under its continued ownership based on Legal & General Capital’s long term approach to investing and the attractive market for housebuilding, the firm added

Kerrigan Procter, chief executive officer of Legal & General Capital, said: “Legal & General is delighted to assume full ownership of CALA Homes, a growing business which we know and understand well. It has a strong management team with proven experience of managing a housebuilding business across business cycles, and has delivered great returns for shareholders since its acquisition in 2013, having tripled in revenue during this time. I am excited to be working with the team as CALA Homes continues to develop and grow under our continued ownership.

“Legal & General has valued the contributions of Patron over the past years and is pleased to have successfully grown the business together.”

Alan Brown, chief executive of CALA Homes, added: “Today’s investment by Legal & General marks the start of another exciting new chapter for CALA Homes and is a fantastic endorsement of our growth potential from one of the UK’s most highly-respected, blue-chip investors who shares our long-term vision.

“Over the past five years we have become one of the UK’s fastest growing housebuilders and this is testament to the strength and ambition of our team, the quality of our homes and our approach to customer service. We have also benefitted from the ongoing backing of our shareholders and I would like to take this opportunity to thank Patron for their support alongside Legal & General.”

CALA Homes is focused on “high quality family housing” having completed 1,677 sites in 2017.

Around 1,322 private homes were sold at an average price of £497,000, with more than 60% of profits coming from English regions and the remainder from Scotland.

It said 21% of its units were affordable homes.

Keith Breslauer, managing director of Patron Capital, said: “With the combined resources of Patron and Legal & General, we have worked successfully with the management team to support the growth of the business and consolidate CALA Homes’ position in the market. Over the last five years, CALA Homes has expanded significantly, growing twofold the annual volume of homes sold and fourfold the operating profits, delivering on the business plan set out at the time of Patron and Legal & General’s acquisition.

“Patron wishes to thank the CALA management for delivering on the plan and Legal & General for its support of the investment; we are confident that the business will continue to grow and thrive under Legal & General’s ownership. Patron remains committed to the UK residential sector with our extensive investment activities in this area.”

Mark Farmer, chief executive of Cast, a property and construction consultancy, said the deal was good for the whole industry.

“Legal & General’s move to takeover over Cala in its entirety is encouraging for the entire sector, as an injection of large scale fresh capital combined with L&G’s much broader strategic ambitions to tackle the UK housing crisis on a number of fronts can only be a good thing,” he said.

“At a time of increasing uncertainty for the construction sector, acquisitions like this provide the strong and decisive leadership needed to address the industry’s many shortfalls. As the capacity of the homebuilding industry continues to be challenged by skills shortages and Brexit-related risks in the movement of labour, the industry must think of novel and innovative ways to deliver more housing across all tenures to a high quality and also to deliver associated vital infrastructure projects.

“Personally, I am certain that this move will be a positive for an under pressure homebuilding sector being increasingly scrutinised for poor corporate governance, land banking, and its reliance on tax payer funded Help to Buy.”

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