CALA Homes is enjoying the sort of year that its chief executive Alan Brown must have dreamed about as part of the management team that negotiated its survival following a £266 million loss in 2008 that threatened its existence.
A refinancing deal helped rebuild the balance sheet and the losses were cut. Brown was rewarded with the top job and another buy-out followed last year involving Legal & General and private equity firm Patron Capital. With the company back in profit and a chunky acquisition under its belt – the purchase of Banner Homes for an estimated £200m – talk is now turning to an exit strategy for its owners.
Cala was valued at £214.2m at the time of last year’s deal, but its value must be soaring. Since then the housing market has picked up a head of steam. Last October, Brown talked about doubling the size of the business over three years. In April, following the Banner deal, that was upgraded to trebling it. In an update on Friday he said the past year had been “unbelievable” and the outlook for profits, which will be announced in the autumn, looks encouraging.
The growth spurt has put Cala into the top ten of housebuilders by revenue and the market is now awaiting with some relish the year-end figures, together with any news on a possible flotation. Brown has played down such prospects. However, the firm has now hired Lazard to advise on options.
With Miller Homes appointing Moelis & Co to advise on strategy it looks like Edinburgh’s big two builders could be on course for stock market listings in the next year.
The sector’s revival has been conspicuous with new developments under way or in the pipeline across Scotland and other companies are looking to refinance. Retirement homes builder McCarthy & Stone is also said to be looking at a flotation. A question they will all be asking is whether they have missed the boat as flotation fatigue has hit a few recent plans.