Financial News

  • 11 June 2014, 8:06

Buyout Firms Battle For Housebuilder Keepmoat

A pack of buyout firms is circling Keepmoat, one of the UK's biggest social housing providers, as George Osborne prepares to offer the housebuilding industry another big policy boost.

Sky News understands private equity funds including Apollo Management and Onex, a Canadian investor, are among the bidders which have tabled offers for Doncaster-based Keepmoat.

The company is one of a string of housebuilders which ended up in the control of Lloyds Banking Group, the taxpayer-backed lender, in the aftermath of its takeover of stricken rival HBOS.

Keepmoat, which employs more than 3,000 people across the UK, built, refurbished or repaired more than 350,000 properties last year.

The latest phase of its sale process comes as the Chancellor prepares to relax brownfield planning restrictions in order to accelerate the construction of new homes.

Mr Osborne is expected to announce details of the measures in his annual Mansion House speech on Thursday amid warnings about a nascent housing bubble, particularly in London and the south-east of England.

A number of leading firms in the sector, including Barratt Developments and Crest Nicholson, met Mr Osborne last week to discuss his plans.

Having been in Lloyds' control since 2009, Keepmoat was later sold toCaird Capital, an investment firm started by the former heads of HBOS's private equity operation.

Caird then merged Keepmoat with Apollo, another housebuilder, before Lloyds again took a stake in October 2012 as part of a debt-for-equity swap, two of the people said.

The auction of Keepmoat, which may fetch in the region of 500m, is being overseen by investment bankers at JP Morgan.

A number of other housebuilders which had been in the bank's possession have since been sold or floated on the stock market, although one, Avant, which was previously known as Gladedale, is also in the process of being sold.

Many have since been restructured or sold, including Countryside Properties, McCarthy & Stone and Cala Homes.

Cala, also headquartered in Scotland, was bought by a joint venture between Legal & General, the insurer, and Patron Capital, the private equity group, in a 210m deal.

Countryside sold a large stake to Oaktree Capital, another investment firm, in February last year, while Crest Nicholson, a larger rival, floated on the London stock exchange.

The flurry of sales involving housebuilding groups backed by Lloyds underlines the extent to which HBOS became embroiled in excessive lending to the sector during the boom which preceded the financial crisis, a trend criticised in a report last year by the Parliamentary Commission on Banking Standards.

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