Legal & General buys rest of CALA Homes from partner

Legal & General Group announced on Tuesday that its Legal & General Capital division has acquired the 52.1% of CALA Homes which it did not previously own, with completion occurring simultaneously with the announcement.

The FTSE 100 company said the business had performed “strongly” under joint ownership with Patron Capital Partners, with revenues growing threefold to £748m in 2017 from £241m in 2013, and profits growing at a combined annual growth rate of 12% over the last three years.

Legal & General said it believed that CALA Homes had “attractive” growth prospects under its continued ownership, based on Legal & General Capital's long term approach to investing and the attractive market for house building 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, with the acquisition cost of the 52.1% share capital being £315m plus additional transaction costs and financial adjustments to reflect the contribution of management and Patron during the period of joint ownership.

“Legal & General is delighted to assume full ownership of CALA Homes, a growing business which we know and understand well,” said Legal & General Capital chief executive Kerrigan Procter.

“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.

"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, added that the investment by Legal & General marked the start of “another exciting new chapter” for CALA Homes, calling it a “fantastic endorsement” of the firm’s growth potential from a blue-chip investor which shared CALA’s long-term vision.

“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,” Brown explained.

“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.”

Keith Breslauer, managing director of Patron Capital, added that with the combined resources of Patron and Legal & General, the pair had 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,” Breslauer said.