Scottish bank HBoS’s integrated finance team has backed the management buyout of UK social housing company Keepmoat for £783 million ($1.5 billion, €1.2 billion) using a package of integrated debt and equity.
HBoS will become a minority shareholder of Keepmoat alongside the management team which is led by chief executive David Blunt. Terry Bramall and Dick Watson the principal shareholders in the company over 35 years have sold their stakes. The business has a turnover of £535 million and an order book of £3 billion.
Keepmoat’s clients include the UK government’s Home and Regeneration divisions and public private partnerships currently represent over eighty percent of the group’s turnover. The buyout comes a few months after UK prime minister Gordon Brown unveiled plans to build 3 million homes across Britain by 2020. The government is committed to spending £6.5 billion on social housing and £8 billion on affordable homes during the next three years.
The group builds affordable homes and regenerates existing stock, working on 34,000 homes over the last year.
Donald Fowler, regional director of Bank of Scotland Integrated Finance for the north of England said in a statement the package would allow management to expand the company into a £1 billion turnover business.
HBoS’ integrated finance team has completed seven deals this year recently buying social housing maintenance company Apollo Group alongside Lloyds TSB for £410 million. It has also backed leisure centre group David Lloyd Leisure, and property consultancy Lambert Smith & Hampton. HBoS Corporate, the arm in which the integrated finance team operates, also backed the £450 million management buyout of Polypipe.
The house-building sector has proved popular with private equity. French buyout group PAI Partners bought housebuilder Kaufman et Broad, for €1.3 billion ($1.8 billion) in June. Swedish firm Industri Kapital sold housebuilder Prevesta for SKr 1.9 billion (€204 million, $276 million) generating a return of nearly ten times its initial investment in March.