Legal & General Group announces today that its Legal & General Capital division has acquired the 52.1% of CALA Homes which it did not previously own.
13 Mar 2018
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, and profits growing at a CAGR of 12% over the last three years.
Legal & General believes that CALA Homes has attractive growth prospects under its continued ownership based on Legal & General Capital’s long term approach to investing and the attractive market for housebuilding in the UK.
If CALA Homes had been 100% owned by Legal & General during 2017 on a post transaction basis, the operating profit before tax would have been £91.5m. Legal & General reported operating profit before tax for its 47.88% stake in CALA Homes in 2017 of £42.5m.
The total valuation of 100% of the equity in CALA Homes was £605m. The acquisition cost of the 52.1% share capital Legal & General did not own was £315m plus additional transaction costs and financial adjustments to reflect the contribution of management and Patron during the period of our joint ownership.
Kerrigan Procter, Chief Executive Officer of Legal & General Capital, 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 house building 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.
"Legal & General has valued the contributions of Patron over the past years and is pleased to have successfully grown the business together."
Alan Brown, Chief Executive of CALA Homes, commented: "Today’s investment by Legal & General marks the start of another exciting new chapter for CALA Homes and is a fantastic endorsement of our growth potential from one of the UK’s most highly-respected, blue-chip investors who shares our long-term vision.
"Over the past five years we have become one of the UK’s fastest growing house builders 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 benefitted from the on going backing of our shareholders and I would like to take this opportunity to thank Patron for their support alongside Legal & General."
Keith Breslauer, Managing Director of Patron Capital, said: "With the combined resources of Patron and Legal & General, we have worked successfully with the management team to support the growth of the business and consolidate CALA Homes’ position in the market. Over the last five years, CALA Homes has expanded significantly, growing twofold the annual volume of homes sold and fourfold the operating profits, delivering on the business plan set out at the time of Patron and Legal & General’s acquisition.
"Patron wishes to thank the CALA management for delivering on the plan and Legal & General for its support of the investment; we are confident that the business will continue to grow and thrive under Legal & General’s ownership. Patron remains committed to the UK residential sector with our extensive investment activities in this area."
- The implied Operating Profit Before Tax of £91.5m for 2017 is also adjusted for transaction and reporting effects from taking Legal & General’s ownership up to 100%
- In its financial year to 30 June 2013, CALA Homes achieved sale completions on 850 homes; in the year to 30 June 2017, it achieved 1,677 sale completions, an increase of 2.0x.
- CALA Homes delivered operating profit of £21.7m in the year to 30 June 2013. The equivalent figure for the year to 30 June 2017 was £92.8m, an increase of 4.3x.
CALA Homes is a leading UK provider of high quality family housing. It delivered 1,677 total completions in 2017. Of these completions, 1,322 private homes were sold with an average selling price of £497k. Over 60% of profits came from its English regions (the remainder from within Scotland), with 21% of units (355 units) delivered being affordable homes.
About Patron Capital Partners
Patron represents approximately €3.4 billion of capital across several funds and related co-investments, investing in property, corporate operating entities whose value is primarily supported by property assets and distressed debt and credit related businesses.
Since it was established in 1999, Patron has invested in over 74 investments and programs involving over 65 million square feet (6 million square metres) in 16 countries, with many of these investments realised.
Investors represent a variety of sovereign wealth funds, prominent universities, major institutions, private foundations, and high net worth individuals located throughout North America, Europe, Asia and the Middle East. The main investment adviser to the Funds is Patron Capital Advisers LLP, which is based in London, and Patron has other offices across Europe including Barcelona, Milan and Luxembourg; the group is comprised of 76 people, including a 43-person investment team.
Further information about Patron Capital is available at www.patroncapital.com.
Kerrigan Procter, Chief Executive Officer of Legal & General Capital:
Legal & General is delighted to assume full ownership of CALA Homes, a growing business which we know and understand well... I am excited to be working with the team as CALA Homes continues to develop and grow under our continued ownership.
Legal & General Capital (LGC) is Legal & General Group’s alternative asset platform, creating assets for Legal & General Retirement and third-party clients in order to achieve improved risk-adjusted returns for our shareholders. LGC has built its capabilities in a range of alternative sectors, including in residential property; specialist commercial real estate; clean energy; alternative credit; and venture capital, which are all supported by long-term structural growth drivers, meet a financing gap and respond to a scarcity of supply that is underpinned by enduring societal needs.
Its purpose is to invest society’s capital for society’s benefit. Investing in the real economy and supporting the Group’s focus on climate and inclusive capitalism, LGC’s investments create jobs, change lives and contribute towards a net zero carbon future.
Legal & General has invested over £29bn in levelling-up regional economies, including through major UK-wide regeneration schemes and has recently made a commitment to enable all its new homes to operate at net zero carbon emissions from 2030.
*at 31 Jun 2021
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
*as at HY 2023