PE investor eyes £700m bid for housebuilder

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It has been reported that private equity investor Guy Hands aims to create a housebuilding empire by putting forward a £700m takeover bid for Doncaster-based Keepmoat Homes.

Sky News says it understands Hands’ Terra Firma Capital Partners is behind one of several offers that Keepmoat’s owners have received for the business in recent days.

Quoting City sources, it says Terra Firma would be expected to combine Keepmoat with the operations of Kier Living, which it bought for £110m in April.

If a deal goes ahead, the combined business would create an industry powerhouse during a buoyant period of trading.

The Doncaster-based firms private equity owner – TDR Capital, which just  supported the Issa brothers £6.8bn takeover of Asda, and Sun Capital – has put the company up for sale to capitalise on rising investor demand.

However the firm’s current owners are also considering a potential stock market flotation, with the firm’s chief executive Tim Beale saying previously: “Keepmoat has been trading well throughout the Coronavirus Pandemic and is well positioned to deliver its future growth plans. As a private equity owned business, Keepmoat Homes remains open to considering all available options, however at this stage no decisions have been made relating to the direction it will take in the future.”

Reports from insiders have estimated the business, which is the UK’s seventh largest housebuilder by volumes, to be worth around £700m to £800m.

Speaking to in February Beale explained the success of the business was partly down to its partnership approach stating: “[The partnership model] is attractive because it offers a high return on capital. We build more sites, we deliver more much needed homes for people with less investment required – which means it’s great for society but it’s great for investors too.”

Beale became chief executive of the business in 2019 having previously joined Keepmoat in 2017 as a divisional chairman before spending a year as chief operating officer and deputy chief executive. Looking ahead, he explains Keepmoat Homes is continuing to grow its operations across its core geographies but particularly in Yorkshire, North West, Midlands and Scotland.

A potential flotation for the business has been rumoured previously, when the former chief executive of Crest Nicholson – Beale’s former employer – who led its floatation, Stephen Stone, joined Keepmoat Homes as non-executive chairman in 2019.

At the time of his appointment it was said Stone had an “exemplary track record” within the sector and that he played a key role in the transformation of Crest Nicholson “returning it to the public markets and generating substantial value for its shareholders”.

Keepmoat Homes was acquired by the TDR and Sun Capital in 2014 from Lloyds Banking Group, with both also owning Knaresborough-based modular housebuilder ilke Homes, which evolved out of Keepmoat Homes and launched in 2017.