Legal & General Group Plc (LON:LGEN) has announced that it has agreed the sale of the UK house builder CALA Group for an enterprise value of £1.35bn, to Ferguson Bidco Limited, an entity owned by funds managed by Sixth Street Partners and Patron Capital.
The consideration for the sale will result in cash proceeds of £1.16bn (after adjustment for net debt), of which c£500m will be paid at closing with the remaining consideration being paid over the next five years on a deferred non-contingent basis. As at HY24, Cala had a Net Asset Value of £1.15bn and generated operating profits of £42m.
The disposal reflects L&G’s disciplined approach to capital allocation and follows the Group’s decision to create a Corporate Investments Unit as outlined at the Capital Markets Event (“CME”) in June 2024.
Disposal proceeds from the sale will primarily be used, as they become available, to reinvest in the Group in line with our strategy and the capital allocation framework set out at the CME. The Board will also consider the proceeds as part of the Group’s announced intention to increase returns to shareholders through ongoing buybacks. As signalled, the sale of Cala reduces the Group’s Solvency Capital Requirement (SCR) by c£100m after diversification.
The transaction is expected to complete in Q4 2024.
António Simões, Group Chief Executive Officer 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[1]. The sale announced today will provide capital to deliver our strategic goals of sustainable growth alongside enhanced returns for shareholders. I would like to thank the whole Cala team for their contribution to the Group and wish them every success in the future.”
Kevin Whitaker, CEO of Cala said:
“Today’s announcement is excellent news for Cala. The acquisition by Sixth Street Partners and Patron Capital demonstrates confidence in Cala’s business plan and growth potential, as our talented team continues to build high quality, sustainable new homes throughout the UK. 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-Chief Investment Officer of Sixth Street, said:
“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. 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, said:
“We are pleased to be able to back the Cala business once again. 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.”
