Legal & General has paid Patron Capital Partners £315m to take over the Cala stake it did not already own, valuing the businesses at £605m.
Cala Homes began life in 1875 as the City of Aberdeen Land Association. Since 2013 it has been jointly owned by Legal & General and Patron Capital Partners, who paid Lloyds Bank £210m for Cala. Since then, revenues have grown from £241m in 2013 to £748m in 2017, and profits growing at a compound annual growth rate of 12% over the last three years. Growth was aided by the 2014 acquisition of Banner Homes from the Prowting family.
Legal & General reported operating profit before tax for its 47.9% stake in Cala Homes in 2017 of £42.5m.
Legal & General Capital chief executive Kerrigan Procter 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.”
Patron Capital managing director Keith Breslauer said: “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.”
Cala Homes chief executive Alan Brown said: “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.”
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."