Patron and Legal & General have acquired Edinburgh-based housebuilder Cala Group in an equity and debt deal worth £210m.
The two investment businesses will each take a 46.5 per cent equity stake in the Edinburgh-based housebuilder, alongside CALA’s senior management, who will take seven per cent.
The deal is made up of £140m of equity and £70m debt. Patron will lead the investment, but both they and Legal & General will have board representation on CALA.
Lloyds will continue to support the business with a £100m five-year banking facility.
Patron Capital Partners is a private equity group, and Legal & General is an insurance, savings and investment management company.
CALA returned to profitability in 2011 for the first time in 2007, with 2012 seeing a six-fold increase in pre-tax profit to £11.4m, and a 35 per cent rise in completions.
As of the end of February 2013, CALA’s land bank stood at 9,900 owned and contracted plots with a gross development value of £3.1bn.
The strategic land bank also comprises 5,400 plots.
CALA chief executive Alan Brown said the investment represents “a significant step forward for Cala”, and that they were “poised for the next phase of our growth.”
“By selecting Patron, one of the leading European real estate private equity houses, and Legal & General, to support the Group in the next stage of our development, we have secured the backing of two highly respected investors who both share our vision for the business.”
“I am also delighted that CALA’s excellent relationship with Lloyds Banking Group will be continuing and look forward to their ongoing support as we deliver the next phase of CALA’s growth strategy.
“From our perspective, the timing of this transaction is perfect and I am tremendously excited about what this deal means for our business as we look forward to a long and fruitful relationship with Patron and Legal & General, both of whom share our values and are passionate about this new partnership.”
Patron managing director Keith Breslauer said the transaction “highlights our confidence in CALA, its growth potential and the group’s competitive position.”
He added that housebuilding was “one of the key areas of focus for the economy.”
“A continued undersupply of new housing in the UK, coupled with the availability of land at a lower point in the cycle and legislation to promote development, creates a favourable backdrop for this deal.”
Rothschild, KPMG and Ernst & Young acted as financial advisers to the transaction.
Patron represents over £2bn in capital funds, while Legal & General commands a market cap of £10bn.