CVC Capital Partners is planning a £500m bid for McCarthy & Stone, the UK’s largest builder of retirement homes, in a further sign of confidence returning to the housebuilding sector.
The private equity group will join forces with Alan Bowkett, who resigned as the builder’s chairman last week to lead an offer.
Moelis & Co, the investment bank hired to carry out a strategic review, presented its recommendations to the board last week. Plans to float on the stock market are believed to have been ruled out for now.
A person close to CVC said an offer was being considered but was at an early stage. Jeremy Jensen, a non-executive director at the group, has replaced Mr Bowkett as chairman.
The housebuilding sector continues to show a revival after a slow recovery from the financial crisis.
Last month Crest Nicholson, which builds upmarket homes, completed the largest listing in London this year at £553m. Countrywide, the UK’s biggest estate agency by revenues and transaction volume, confirmed plans to raise £200m through a flotation.
Despite stagnant house prices, Persimmon, Barratt, Redrow, Taylor Wimpey and Bovis have reported soaring profits growth in the past week. The sector has benefited from government schemes to boost the mortgage market.
McCarthy & Stone, which sold nearly 1,400 properties last year, posted its strongest financial performance since 2007 in October.
It said annual sales grew 12 per cent to £257.7m and underlying earnings rose 10 per cent to a five-year high of £39.9m, in spite of the difficult housing market.
McCarthy & Stone was taken private in a £1.1bn deal in 2006 by Sir Tom Hunter and billionaire brothers David and Simon Reuben. A debt-for-equity swap in 2009 left Lloyds Banking Group holding a 25 per cent stake, which it has recently sold to Goldman Sachs and TPG, the American private equity firm. The builder has £500m of debt due to mature in 2014.
The company, which employs about 700 people, has built about 45,000 retirement homes in the past 35 years.
CVC and McCarthy & Stone declined to comment.