Cala joins ranks of housebuilders eyeing IPO

Cala has become the latest private housebuilder to take a step towards public markets, appointing an independent adviser to work on a potential initial public offering.

The upmarket Scottish builder has targeted growth since being taken over last year by insurer Legal & General and Patron Capital, and in March bought Banner Homes, which took it into the top 10 housebuilders by revenues.

The developer on Thursday appointed Lazard, which worked with the housebuilder on the Banner acquisition, despite debate surrounding the value that independent advisers bring to flotations.

"It's hugely exciting," said Alan Brown, chief executive. "We're obviously on a big growth trajectory [and] we're performing extremely well. Having bought Banner, we're now in the Premier League."

The company joins rival housebuilders Miller, which this year appointed Moelis & Co, and Countryside, which has hired STJ Advisors, in naming brokers to advise on future growth plans and possible stock market listings.

McCarthy & Stone, the retirement home provider taken private in 2006 by Sir Tom Hunter and property billionaires David and Simon Reuben, was last week reported to be looking for financial advisers to help it refinance £92m of outstanding net debt.

The developer, whose owners include TPG and Goldman Sachs, is also considering going public. But each of the private housebuilders is maintaining a cautious approach to IPO speculation. Investors in recent months have shown signs of fatigue after a bumper crop of London listings in the early part of the year.

Cala in 1875 became the first Scottish company to list on the London Stock Exchange, but was taken private by the management in 1999.

When Cala was taken over by L&G and Patron, it set itself the target of almost trebling the size of the business to about 1,400 units and £500m revenues by 2017. Mr Brown said the builder was on track to do that up to 18 months ahead of schedule.

"They invested in us in order to make a return on their investment," he said, referring to the potential for a stockmarket flotation. "So, at some point, in the future we will be looking for a way to maximise that for them."

A person familiar with the matter said the options included a secondary buyout or an IPO, though not before the "back end" of 2015. The person ruled out a trade sale.

Cala expects to report a "significant" uplift in underlying profits compared with last year's record earnings of £12.5m when it reports annual results in September. According to a trading update released on Friday, the company contracted land with a gross development value of £765m in the year to the end of June, compared with £455m in the prior year, though private completions were flat at just under 700 units.

Lazard declined to comment.

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