Legal & General (L&G) has finalised an agreement to sell CALA Group, a UK-based house builder, to Ferguson Bidco for an enterprise value of £1.35bn ($1.78bn).
Ferguson Bidco is an entity owned by funds managed by Sixth Street Partners and Patron Capital.
Cala, with projects across the South of England, the Cotswolds, and Scotland, was previously jointly owned by L&G and Patron Capital.
In 2018, L&G acquired the remaining 52.1% of Cala Homes from Patron, taking full ownership.
Cala CEO Kevin Whitaker 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.”
The latest sale is expected to yield cash proceeds of approximately £1.16bn after adjustments for net debt, with around £500m to be paid at closing.
The remaining balance will be paid over the next five years on a deferred non-contingent basis.
The proceeds from the disposal will be reinvested in L&G, adhering to its capital allocation framework outlined at the Capital Markets Event in June this year.
Moreover, L&G’s board is considering these proceeds for increasing shareholder returns through ongoing buybacks, as previously announced.
The sale of Cala will also reduce L&G's solvency capital requirement by approximately £100m after diversification.
The completion of the transaction is anticipated in the fourth quarter (Q4) of 2024.
Sixth Street co-chief investment officer Julian Salisbury 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.”
