L&G splashes out £315 million to take full control at Cala Homes

Insurer Legal & General (L&G) has swooped to buy out the joint owner of Cala Homes in a transaction that values the upmarket Scottish housebuilder at £605 million.

A Cala Homes development

Yesterday’s acquisition, which was flagged in reports on Monday evening, involves L&G paying about £315m to acquire the remaining 52.1 per cent of Cala Homes that the insurance major did not already own.

The Edinburgh-based housebuilder’s ownership was split between L&G and Patron Capital in 2013, with the management team holding a small stake in the business.

L&G said the acquisition was done by its L&G Capital division. It said: “The business has performed strongly under our joint ownership with Patron Capital Partners, with revenues growing threefold from £241m in 2013 to £748m in 2017,”

It said the deal involved additional transaction costs as well as “financial adjustments” meant to “reflect the contribution of management and Patron during the period of our joint ownership”.

Alan Brown, chief executive of Cala Homes, hailed the deal as marking “the start of another exciting new chapter for Cala Homes”.

He said: “Over the past five years we have become one of the UK’s fastest-growing housebuilders and this is testament to the strength and ambition of our team, the quality of our homes and our approach to customer service.

“We have also benefited from the ongoing backing of our shareholders and I would like to take this opportunity to thank Patron for their support alongside Legal & General.”

The housebuilder said in January that it was on track for its sixth consecutive year of record profits.

L&G said it believed Cala had “attractive growth prospects”, and that if the Scottish firm had been 100 per cent-owned by the insurer in 2017 it would have made an operating profit of £91.5m. L&G reported an operating profit of £42.5m for 2017 for its 47.9 per cent stake.

Cala Homes is focused on “high quality family housing” having completed a total of 1,677 sites in 2017.

About 1,322 private homes were sold at an average price of £497,000, with more than 60 per cent of profits coming from English regions and the remainder from Scotland.

It said that about one-fifth of its units were affordable homes.

Kerrigan Procter, chief executive of L&G’s capital division, 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.”