Hunter sells property firm but retains rights to profit

SIR Tom Hunter has continued to unwind his links with banking casualty HBOS following the sale of a property joint-venture – but the Ayrshire entrepreneur will still share in the profits from £2 billion of urban regeneration work.

Hunter yesterday sold Inpartnership, a property company with bases in Birmingham and Manchester, to Edinburgh-based Sigma Capital for £347,000 in new shares.

The investment firm, in which Hunter’s West Coast Capital (WCC) vehicle holds a 22 per cent stake, will pay WCC £3.1 million from the first £10m of profits made by Inpartnership on its three current projects.

WCC will then be entitled to 10 per cent of any further profits on the developments in Liverpool, Salford in Greater Manchester and Solihull in the West Midlands.

Inpartnership had been owned by HBOS, WCC and one of its subsidiaries, WCC Trading.

A spokesman for Hunter said: “Inpartnership has great assets, while Sigma has expertise in financing and asset management. It will be a stronger business with the two together.”

Hunter amassed a fortune through commercial property deals in the run up to the credit crunch but has since seen write-downs in the value of his assets and debt-for-equity swaps with lenders.

He wrote down a stake of around £45m on housebuilder Crest Nicholson in 2009 when the joint venture with HBOS was seized by lenders, while he reduced his 40 per cent stake in Wyevale Garden Centres to 25 per cent.

In March, Grant West Property and Grant Residential Property – a pair of property funds set up in 2007 by Hunter and banker Peter Cummings to invest in student flats – were placed in administration, ending another link with HBOS.

Graham Barnet, chief executive of Sigma, said his firm would be able to bring “greater access to finance” to the table than WCC and that his team would “unlock significantly more of the value” in the partnerships.

“The acquisition of Inpartnership represents an exciting and significant step forward for Sigma,” Barnet added. “As we highlighted in our annual report, we have been working with our largest shareholder, WCC, on a number of material property-related initiatives and the acquisition of Inpartnership brings the first of these initiatives to fruition.”

Sigma and WCC are working on a new £50m fund to buy up distressed commercial property assets from banks. In April, Jim McMahon – one of the founding partners of WCC in 1991 – was appointed to Sigma’s board as an non-executive director to help the two firms work together.

Inpartnership founders Graeme Hogg and Duncan Sutherland will remain as directors of the firm and will help to integrate the business into Sigma. Their property firm turned over £692,000 in the year to 31 March and made an operating loss of £74,000. It had net assets of £344,000 and will carry no debt when it is sold.

To reflect the greater focus on commercial property, Sigma is also promoting John Hamilton and Gwynn Thomas – both directors of one of its subsidiaries – to the group’s main board.

Sigma also issued an upbeat trading update, in which it confirmed that it is still on course to deliver “a materially-enhanced performance” in the first-half.

Robert Sanders, analyst at Arbuthnot, Sigma’s house broker, said: “At this stage, we are not factoring in any contribution to our 2011 forecasts on the back of the acquisition but it augurs very well for future years.”

Shares in Aim-quoted Sigma closed up 27 per cent at 9.5p.