Financial News

  • 18 August 2014, 12:34

Osmond's Sun Closes In On Keepmoat Deal

The co-founder of PizzaExpress and one of the restaurant chain's former owners are poised to clinch a 400m takeover of Keepmoat, one of Britain's biggest social housing developers.

Sky News has learnt that Sun Capital Partners, an investment firm headed by Hugh Osmond, the prominent City financier, is in exclusive talks to buy the Doncaster-based company alongside TDR Capital, a private equity group.

The negotiations are at an advanced stage and could lead to a deal being signed as soon as next week, according to insiders.

A takeover of Keepmoat, which built, refurbished or repaired more than 350,000 properties last year, would remove another equity stake in a major housebuilder from the books of Britain's state-backed banks.

The company became a ward of the state when Lloyds Banking Group was rescued by British taxpayers in 2008.

Lloyds and JP Morgan, which has been overseeing the auction, are providing financing for the deal, a source said on Friday.

Sun and TDR have seen off competition from rival bidders including Apollo Management although it is possible that the deal could yet fall apart.

The firms' interest in acquiring Keepmoat reflects their belief that the housing market outside London is likely to demonstrate steady growth during the coming years, the source added.

The deal will follow Mr Osmond's involvement in corporate turnarounds in sectors including pubs, insurance and energy.

Sun and TDR Capital previously worked together during their investment in Phoenix, a closed life assurance fund provider.

It also comes four years after Mr Osmond tried to buy Crest Nicholson, the housebuilder which subsequently floated on the stock market and which has been among the major beneficiaries of the Government's Help to Buy programme.

Keepmoat is one of a string of housebuilders which ended up in the control of Lloyds - now 25%-owned by taxpayers - in the aftermath of its takeover of stricken rival HBOS.

The company, which employs more than 3,000 people across the UK, describes itself as "a leading national provider of integrated affordable housing development and community regeneration services".

Having been in Lloyds' control since 2009, Keepmoat was later sold to Caird 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.

A number of other housebuilders which had been in the bank's possession, including Countryside Properties, McCarthy & Stone and Cala Homes, have since been sold or floated on the stock market.

Another, Avant, which was previously called Gladedale, is also in the process of being sold.

The flurry of disposals 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.

The bank's lending practices were criticised in a report last year by the Parliamentary Commission on Banking Standards.

In the year to March, Keepmoat recorded revenue of 930m, with nearly 2000 properties sold by its homes division and its regeneration arm boosted by a major private finance initiative contract win in Leeds.

Sun Capital and Keepmoat declined to comment, while TDR could not be reached.

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