Legal & General (L&G) has announced the sale of CALA Group, the UK-based housebuilder, for an enterprise value of £1.35 billion. The buyer, Ferguson Bidco Limited, is backed by funds managed by Sixth Street Partners and Patron Capital. This sale marks a strategic shift for L&G as it refocuses on its core business areas, including insurance, retirement, and asset management.
L&G acquired a majority stake in CALA Homes in 2013, helping it grow into one of the UK's top housebuilders. Over the past decade, CALA has expanded significantly, increasing its annual revenue and operating profits. The sale will result in cash proceeds of £1.16 billion for L&G after adjusting for net debt. Approximately £500 million of this amount will be received at closing, with the remainder paid over the next five years.
This move is in line with L&G's strategy to simplify its portfolio and allocate capital to its core businesses. The sale also reflects L&G's disciplined approach to capital allocation. By divesting CALA, L&G aims to reduce its Solvency Capital Requirement (SCR) by around £100 million, freeing up capital to be reinvested in the group's strategic growth areas and potentially allowing for increased returns to shareholders.
Under L&G's ownership, CALA Homes has transformed significantly, tripling the number of homes it builds each year. This sale represents a new chapter for CALA, with Sixth Street Partners and Patron Capital ready to support its continued growth. Kevin Whitaker, CEO of CALA, remarked that this acquisition demonstrates confidence in CALA's business plan and growth potential, as the company continues to build high-quality, sustainable homes across the UK.
The new ownership by Sixth Street and Patron Capital brings fresh capital and strategic support, potentially enabling CALA to expand its footprint and innovate in the UK housing market. CALA's management team will continue to lead the business, ensuring continuity and stability during this transition.
For Legal & General, this sale is part of a broader strategy to focus on its core, synergistic businesses. António Simões, Group CEO of L&G, stated that the transaction allows the group to streamline its portfolio and align its capital allocation with its strategic goals. The sale proceeds will be used to support sustainable growth, enhance shareholder returns, and drive forward L&G's commitment to long-term value creation.
By divesting CALA, L&G is sharpening its focus on its primary growth areas, such as retirement solutions, insurance, and asset management. This strategic realignment enables L&G to strengthen its market position and support future investments in areas that offer greater synergies with its core operations.
The sale of CALA Homes is likely to have a ripple effect on the UK housing market. As one of the UK's leading housebuilders, CALA's new ownership could bring fresh perspectives and strategies to the market. With Sixth Street and Patron Capital's backing, CALA is expected to continue its focus on quality and sustainability, potentially introducing new initiatives that could set trends within the industry.
For L&G, the sale provides an opportunity to reinvest in other sectors and support its broader strategic initiatives, which could indirectly influence the housing market by channelling investments into areas like affordable housing, urban regeneration, and infrastructure.
Legal & General's decision to sell CALA Homes for £1.35 billion marks a pivotal moment for both companies. For L&G, this sale aligns with its strategy to streamline its operations and focus on core business areas. For CALA Homes, the acquisition by Sixth Street Partners and Patron Capital opens new avenues for growth and innovation in the UK housing market. The long-term impact of this transaction will unfold over time, but it certainly marks a significant development in the UK's real estate landscape.
This move not only signifies a strategic realignment for L&G but also sets the stage for potential shifts in the UK housing market as CALA embarks on its new journey under different ownership.
