Bank of Scotland buys LDC’s stake in property business

Lloyds TSB Development Capital has sold its minority stake in UK property business Apollo Group to the Bank of Scotland.

The Bank of Scotland, the corporate banking arm of UK commercial bank HBoS, has backed the management team in a £410 million secondary buyout of UK property business Apollo Group. Lloyds Development Capital backed the original management buyout of Apollo in 2006.

The management team, led by Gary Couch, will own a 79.5 percent stake in the business while the Bank of Scotland’s integrated finance arm will own the other 20.5 percent.

Apollo Group is one of the UK’s biggest providers of property services and operates in both the public and private sectors. Its projects range from large social housing schemes to the construction of new educational facilities.

The Bank of Scotland’s previous investments in the property sector include McCann, in which the bank bought a minority stake for £70 million, and Rydon, in which it bought a minority stake for £100 million, both in 2006.

The bank is thought to be preparing a £300 million bid for Erinaceous, another UK property services business that European buyout firms 3i and Bridgepoint are competing for.
The bank is also reported to be one of the frontrunners in the final round of the auction of Keepmoat, a UK social housing business, with Warburg Pincus and Cinven.

The Bank of Scotland’s integrated finance team provides funding, including senior debt, mezzanine debt, loan stock and equity, to UK mid-market management buyouts between £20 million and £500 million.

Founded in 1981, Lloyds Development Capital has invested in more than 400 companies and typically invests between £2 million and £50 million in each deal.