Housebuilder Cala revives £700m sale plan
11 August 2017 Business News
The premium housebuilder Cala Group has revived secret talks about a £700m sale – months after a takeover by a Chinese property giant collapsed.
Sky News has learnt that Cala’s shareholders have asked Lazard, the investment bank, to begin sounding out prospective bidders in the last fortnight.
A full auction of the business is expected to get underway in the autumn.
Cala is jointly owned by Legal & General, the insurer, and Patron Capital, the specialist real estate investment firm.
Cala, which describes itself as Britain’s most upmarket housebuilder of scale, was heading towards a sale to Evergrande, a Chinese property group, last year.
However, the deal fell foul of growing restrictions on outbound Chinese capital flows amid anxiety in Beijing about a vast overseas spending spree by big companies.
The revived sale process is at an early stage, although people close to Cala suggested that private equity firms, pension funds and some rival housebuilders were expected to look at it.
The auction comes after solid sales figures announced by Cala last month, and just days after Miller Homes was sold to the private equity firm Bridgepoint in a £655m deal.
Based on the earnings multiple paid for Miller, Cala, a builder of more expensive homes, is likely to be worth more than £700m.
A number of privately held companies in the sector are seeking to take advantage of measures aimed at meeting a Government target of building one million new homes by 2020.
If completed, a sale would represent a further vote of confidence in the UK housebuilding sector at a time of broader housing market uncertainty a year after the EU referendum.
L&G and Patron took control of Cala in 2013 in a deal valuing the company at £210m, and it has made one substantial acquisition since then.
They have considered a stock market flotation of the company, and that could remain an option depending upon the fate of the takeover discussions.
Cala’s operations are concentrated outside London and the South East, and focused on areas in the Home Counties, Cotswolds, and around Aberdeen, Edinburgh and Glasgow.
Last month, the company announced its fifth consecutive year of record profits, with annual revenue exceeding £700m for the first time.
Alan Brown, Cala’s chief executive, said the results reflected strong momentum in the business but issued a warning about the deliverability of the Government’s housebuilding target.
“Following the General Election result, we now have a Conservative Government with a stated manifesto pledge to build one million new homes by 2020,” he said.
“However, if the UK is to stand any hope of delivering on this aim, urgent reform of the planning system is required to remove the obstructions that are preventing us and other developers from getting on and building the homes the country desperately needs.”
A Cala spokesman declined to comment on the sale process.