China's Evergrande in talks to buy British housebuilder Cala: Source
 |
|
View of a logo of Evergrande Group on a high-rise office building in Shenzhen city, South China's Guangdong province, August 20, 2016. [Photo/IC] |
China Evergrande Group, China's second-largest property developer, is in "early stage" talks to buy Cala Homes, a person familiar with the upmarket British housebuilder told Reuters.
Edinburgh, Scotland-based Cala Homes, which is owned by insurer Legal & General and real estate managers Patron Capital, was being advised on the offer by investment bank Lazard, its long-term advisor, the person said.
Sky News, which first reported on the approach, said Evergrande's offer could be worth close to 700 million ($857 million) pounds.
Cala, which builds large, high-end homes across affluent areas of Britain such as around the M25 motorway which circles London, in the Midlands and Scotland, reported revenue of 587.1 million pounds for the year ended June 30, 15 percent higher than a year earlier. Net bank debt stood at 123.9 million pounds at end-June.In its results statement in October, Cala said it had a contracted land bank with gross development value of 4.7 billion pounds as of end-June and that enquiry levels and reservation rates had risen in the 13 weeks after the EU vote on June 23.
"From time to time we may find ourselves the subject of speculation but from our perspective it is very much business as usual," a Cala spokesperson said in an emailed statement.
Legal & General, Patron Capital and Evergrande declined to comment.
The approach comes as recent mortgage data and statements from housebuilders have indicated that the UK housing market is recovering somewhat from a sharp downturn in activity that followed Britain's vote to leave the European Union.
The Brexit-induced pound slide has fueled foreign demand to invest in the sector, especially from Chinese buyers keen to diversify away from a slowing home market.
China Vanke confirmed in September that it had bought a London office property.
For Evergrande, one of the most indebted companies in the industry, the purchase of Cala would mean access to the UK housing market as developers benefit from a chronic supply shortage. Britain launched a 5 billion-pound homebuilding stimulus package last month.
Evergrande has been aggressively investing in other companies as it looks to lift some of the pressure of having amassed some $57 billion in debt, almost six times its market value, on land acquisitions and corporate mergers.
