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Retirement housebuilder McCarthy & Stone lays foundation for £1bn IPO Retirement housebuilder McCarthy & Stone lays foundation for £1bn IPO
(35 minutes later)
McCarthy & Stone, the retirement home builder, has announced plans to return to the stock market nine years after a debt-financed buyout led by HBOS almost forced the business into administration during the financial crisis. McCarthy & Stone, the retirement homebuilder, has announced plans to return to the stock market nine years after a debt-financed buyout led by HBOS almost forced the business into administration during the financial crisis.
The company said it would sell at least a quarter of the business to raise £70m for land purchases and to allow Goldman Sachs and other shareholders to cash in parts of their stakes. The sale is likely to value McCarthy & Stone at about £1bn, though the company declined to discuss the valuation.The company said it would sell at least a quarter of the business to raise £70m for land purchases and to allow Goldman Sachs and other shareholders to cash in parts of their stakes. The sale is likely to value McCarthy & Stone at about £1bn, though the company declined to discuss the valuation.
McCarthy & Stone is the biggest builder of managed properties for retired babyboomers and has about 70% of the market. It said that last year 3.5 million people were interested in buying a retirement property, butonly 128,000 purpose-built properties had been built, with demand expected to increase as the population ages.McCarthy & Stone is the biggest builder of managed properties for retired babyboomers and has about 70% of the market. It said that last year 3.5 million people were interested in buying a retirement property, butonly 128,000 purpose-built properties had been built, with demand expected to increase as the population ages.
In the financial year to the end of August, revenue increased 25% to £486m and pre-tax profit, excluding exceptional items, rose 40% to £88.4m. It plans to sell more than 3,000 homes a year and to invest £2.5bn in new land over the next four years.In the financial year to the end of August, revenue increased 25% to £486m and pre-tax profit, excluding exceptional items, rose 40% to £88.4m. It plans to sell more than 3,000 homes a year and to invest £2.5bn in new land over the next four years.
Related: McCarthy & Stone to create 400 jobs as it expands retirement homes businessRelated: McCarthy & Stone to create 400 jobs as it expands retirement homes business
Goldman and the private equity investors TPG, Anchorage Capital and Strategic Value Partners own about 57% of the company, with the remainder held by 26 unidentified smaller investors. The owners considered floating the business in 2012 and the company held talks with potential private-equity buyers including Bridgepoint Capital.Goldman and the private equity investors TPG, Anchorage Capital and Strategic Value Partners own about 57% of the company, with the remainder held by 26 unidentified smaller investors. The owners considered floating the business in 2012 and the company held talks with potential private-equity buyers including Bridgepoint Capital.
Clive Fenton, McCarthy & Stone’s chief executive, said: “We have been approached by a number of interested parties over the past year. [The company] did very well on the stock market and our view is that the place for this company is on the London Stock Exchange. The talks didn’t develop.”Clive Fenton, McCarthy & Stone’s chief executive, said: “We have been approached by a number of interested parties over the past year. [The company] did very well on the stock market and our view is that the place for this company is on the London Stock Exchange. The talks didn’t develop.”
He said a stock market listing would give the company the ability to raise more capital to expand as well as increasing its brand recognition and credibility.He said a stock market listing would give the company the ability to raise more capital to expand as well as increasing its brand recognition and credibility.
The planned share offering is a turnaround for the company, which came close to collapse during the financial meltdown of 2008 and 2009. It was listed on the stock market for 22 years until December 2006 when HBOS teamed up with Sir Tom Hunter, the Scottish multimillionaire, to buy the company.The planned share offering is a turnaround for the company, which came close to collapse during the financial meltdown of 2008 and 2009. It was listed on the stock market for 22 years until December 2006 when HBOS teamed up with Sir Tom Hunter, the Scottish multimillionaire, to buy the company.
The deal, spearheaded by the disgraced former head of HBOS’s corporate bank, Peter Cummings, left McCarthy & Stone with £900m of debt while struggling to sell its homes in a falling market. After HBOS was rescued by Lloyds in early 2009, Lloyds became a big shareholder in McCarthy & Stone and later sold its stake to Goldman and other major investors.The deal, spearheaded by the disgraced former head of HBOS’s corporate bank, Peter Cummings, left McCarthy & Stone with £900m of debt while struggling to sell its homes in a falling market. After HBOS was rescued by Lloyds in early 2009, Lloyds became a big shareholder in McCarthy & Stone and later sold its stake to Goldman and other major investors.