UK financial services company Legal & General has sold its UK house builder, Cala Group, to a consortium led by Sixth Street Partners and Patron Capital for £1.35 bn (€1.6 bn).
Legal & General will receive £1.16 bn (€1.37 bn) in cash from the sale, with half of that amount payable upfront and the remainder spread out over five years.
Previously, Legal & General and Patron Capital were joint owners of Cala. Legal & General acquired the 52% in Cala that it did not already own from Patron in 2018.
At the end of the first half of 2024, Cala Group had a net asset value of £1.15 bn (€1.36 bn) and generated operating profits of £42 mln (€49.8 mln).
The decision to sell Cala aligns with Legal & General's strategy to focus on core businesses and optimize capital allocation.
The proceeds from the sale will be used to reinvest in the company and potentially increase shareholder returns through share buybacks. The sale is also expected to strengthen Legal & General's financial position by reducing its regulatory capital requirements.
António Simões, Group CEO of Legal & General, said: ‘This transaction demonstrates continued momentum in executing our strategy, simplifying our portfolio to enable a sharper focus on our core, synergistic businesses. Cala has been an important part of L&G for over a decade, with profits increasing ten-fold since our initial investment in 2013.’
Kevin Whitaker, CEO of Cala, commented: ‘The acquisition by Sixth Street Partners and Patron Capital demonstrates confidence in Cala’s business plan and growth potential. L&G has been a great support to Cala throughout its investment and ownership. Since 2013, we have grown revenues and profits five- and ten-fold respectively, and tripled the number of homes we build each year.’
Julian Salisbury, co-CIO of Sixth Street, said: ‘We, together with Patron Capital, 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.’
Keith Breslauer, managing director of Patron Capital, added: ‘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. 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.’
The sale of Cala Group should be finalized in Q4 2024.
