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November 8, 2012 2:11 am
Lloyds Banking Group is attempting to sell stakes in a clutch of housebuilders that it took on at the height of the 2008 banking crisis, following a recovery in the sector’s fortunes.
Expressions of interest in Cala, the upmarket builder predominantly based in Scotland and the Midlands in which Lloyds owns shares, are due next week – with private equity groups and rivals, such as Taylor Wimpey, expected to table bids. The company, which returned to the black last year for the first time since 2007, is valued at approximately £250m, according to people familiar with the sale.
Lloyds is also selling its interest in McCarthy & Stone, the UK’s biggest builder of retirement apartments, to Goldman Sachs and TPG as part of its ‘Project Lundy’ disposal plan. Other assets in its portfolio include a stake in Countryside Properties, part-owned by the Cherry family, which appointed JPMorgan to look at a sale earlier this year.
Disposing of these stakes will take Lloyds a step further in its restructuring of the portfolio it inherited when it bought HBOS in 2008.
Last year, Lloyds – which is 40 per cent owned by the taxpayer – sold its shares in Crest Nicholson to Varde Partners, a distressed debt investment fund. Crest is being prepared for a stock market listing early next year, with an estimated value of around £500m.
The sell-offs come as housebuilders return to stability after a slow recovery from the financial crisis. Almost all the larger listed housebuilders have restored their margins by building on cheap land bought during the recession, taking advantage of government measures to improve mortgage availability, and developing more lucrative, higher margin family homes rather than apartments.
Shares in the listed housebuilders – Barratt Developments, Taylor Wimpey, Redrow, Bellway, Berkeley, Bovis and Persimmon – have risen by an average of 57 per cent this year, and most have reported large increases in profits.
This revival of fortunes has already sparked a bout of takeover activity. Last month, Persimmon, the UK’s largest housebuilder by stock market value, paid £35.7m for Hillreed Homes in the southeast of England – the first big deal to be completed in the sector in five years. Steve Morgan, the founder and executive chairman of Redrow, also made an aborted attempt to take the company private.
With valuations at their highest in years, Charlie Campbell, analyst at Liberum Capital, said it was a logical time for Lloyds to sell its stakes.
“Multiples have risen substantially, the stock market is already pricing in a recovery and house prices are not expected to shoot up next year,” he said. “So you may decide this is as good a time to sell as any and certainly better than 12 months ago.”
Taylor Wimpey, Lloyds Banking Group and Cala declined to comment.
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