Tulloch Homes reveals management buyout

One of the best-known businesses in the Highlands, housebuilder Tulloch Homes, is being bought out by its management team from its investment banking and private equity owners.

Tullochs chief executive George Fraser is leading the buyout

The buyout – for an undisclosed price – is led by Inverness-based Tulloch’s chairman, Tom Allison, chief executive George Fraser and Sandy Grant, the finance director, who yesterday said the deal would secure 150 Scottish construction jobs.

The trio, who have run the company for several years, say the housebuilder also supports a further estimated 1,000 jobs in communities throughout the north of Scotland. The sellers are investment bank Goldman Sachs and private equity giant TPG.

“This is a very significant chapter in the history of one of the most important companies in the Highlands and a deal which we’re confident will secure the future of the business for many years to come,” Allison said.

“Tulloch’s 90 years of construction expertise and its reputation for developing high quality homes at reasonable prices means the company is very well placed to capitalise on the undoubted opportunities available in the years ahead.”

The deal is being backed by a £30 million funding package from Bank of Scotland, owned by partly taxpayer-controlled Lloyds Banking Group.

The housebuilder, which shelved plans for a stock market flotation in 2008 due to the financial crash, said that, as part of the buyout, it will write down the value of its land bank by an expected £10.5m “to reflect current market realities”.

In addition, Tulloch, which has for several years owned the three stands at Inverness Caledonian FC’s stadium on a ground lease from Highland Council, is transferring its interests in the stands to a trust set up for the community’s benefit.

Chief executive Fraser said the reaction from staff to the management buyout had been “overwhelmingly positive”. He added: “The combination of a management team which has been committed to the business for many years, together with a highly skilled workforce and experienced board members, provides a fantastic platform for future growth.

“This opportunity to develop Tulloch comes at an opportune time in the economic cycle, as the housing market is showing definite signs of recovery.”

He said the ownership of the stands at Tulloch Caledonian Stadium was a legacy of the group’s “previous diverse nature but, as we’re now focused on housebuilding, it’s the right thing to do”. A former chairman of the company, David Sutherland, was also a former chairman of the football club.

The company said that in the next few weeks it expected to post sales of more than £58m and 280 home completions for the year to end-June 2014. It is also understood to have made an operating profit.

Grant, the firm’s finance director, said: “We expect to build a further 300 homes in 2015 via a strong pipeline of developments in our core Highlands market, as well as two new developments in Aberdeenshire in the city centre and Bridge of Don.”

The UK housing market has come back strongly in recent years following a period in the doldrums during the financial crash and recession.

The nationwide recovery has been partly driven by the UK and Scottish Government’s Help to Buy schemes, low interest rates, stronger lender balance sheets and demand for homes outstripping availability.

SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING

• Get the latest business headlines from a variety of news sources emailed to your inbox each morning