BY Richard Summerfield
Legal and General (L&G) is to sell its UK housebuilder Cala Group to investment groups Sixth Street Partners and Patron Capital in a $1.8bn deal, as part of a plan to slim down and focus on its main operations.
The deal will see L&G receive around £500m when the deal closes, which is expected to happen before the end of the year, and the rest of the cash over five years. The company plans to reinvest the funds in its wider operations, as well as supporting future shareholder returns. L&G paid more than £315m to buy Patron’s majority stake in Cala in 2018. Patron formerly owned Cala alongside L&G but in 2018 sold its stake in the company at an equity valuation of £605m.
“Today’s announcement is excellent news for Cala,” said Kevin Whitaker, chief executive of Cala. “This investment by Sixth Street and Patron demonstrates their confidence in Cala’s business plan and further potential. We look forward to developing a strong partnership with Sixth Street and reigniting the excellent relationship we shared with Patron between 2013 and 2018. I would like to thank Legal & General for their support since they first invested in Cala. With their backing, Cala has successfully tripled the number of homes we build each year, whilst revenue and profits have grown five- and ten-fold respectively.”
“Cala has a bright future and we are proud to be entering this new chapter as stewards of a company with such a deep history and long track record of sustainable growth,” said Julian Salisbury, co-chief investment officer of Sixth Street. “We, together with Patron, look forward to continuing to support Cala and its management team, not only with capital but also with the significant resources of our London-based real estate investment team led by Giulio Passanisi.”
“We are pleased to be able to back the Cala business once again,” said Keith Breslauer, managing director and founder of Patron Capital. “Cala is one of the UK’s leading housebuilders with a best-in-class landbank and a focus on building high-quality homes, being consistently ranked five-star for customer service. Furthermore, Cala is also a people business with a strong corporate culture and a business we know well, and we look forward to working closely with Cala’s impressive management team and our partner, Sixth Street, to further build the business and help tackle the undersupply of homes in the UK.”
“This transaction demonstrates continued momentum in executing our strategy, simplifying our portfolio to enable a sharper focus on our core, synergistic businesses,” said António Simões, group chief executive of L&G. “Cala has been an important part of L&G for over a decade, with profits increasing ten-fold since our initial investment in 2013. The sale announced today will provide capital to deliver our strategic goals of sustainable growth alongside enhanced returns for shareholders. I’d like to thank the whole Cala team for their contribution to the Group and wish them every success in the future.”
News: Legal & General sells UK housebuilder CALA Group in $1.8 bln deal