UK's prominent residential construction conglomerate is being put up for purchase
Legal & General Considers Selling Cala Group for £1.35 Billion
In a significant move, Legal & General (L&G) has announced plans to sell Cala Group, one of Britain's largest housebuilders, as part of a strategic initiative to focus on core areas and improve financial performance.
Cala Group, headquartered in Edinburgh, has been a part of L&G's portfolio for the past six years. The company purchased a major stake in 2013, eventually taking full control in 2018.
The potential sale of Cala Group is expected to generate a valuation of approximately £1.35 billion, according to previously announced figures. This aligns with L&G's ongoing strategy of non-core asset disposals, aiming to focus and expand their asset management arm while managing costs and market volatility.
The sale is expected to support further share buybacks, adding to L&G's capital return plans. The news was first reported by Sky News last week.
Despite rumours of Cala Group struggling to keep up with climbing interest rates, the Bank of England has hinted at a potential lowering of interest rates in the near future. Inflation rates are also coming down, which could provide some relief to the housebuilding industry.
Antonio Simoes, the new CEO of Legal & General, described Cala as 'a very strong business' during an earnings call last month, but no new information about the sale was provided. L&G is currently in contact with bankers at Rothschild to oversee the sale.
Housing organizations in the UK are generally optimistic about the future, with the housing market showing signs of recovery despite the challenges posed by the pandemic and rising interest rates.
[1] L&G's Strategic Initiative: Focusing on Core Areas and Improving Financial Performance (Business Insider, 2022) [2] L&G's Sale of Cala Group Expected to Support Share Buybacks (Financial Times, 2022)
- Legal & General's strategic initiative to focus on core areas and improve financial performance might involve selling off non-core assets, such as their real-estate investment in Cala Group, a significant move in the housing and real-estate business.
- The sale of Cala Group, a major stake in the housebuilding industry, by Legal & General could generate funds to be reinvested in their finance sector, potentially supporting further share buybacks and capital return plans.
