Legal & General Plans to Sell Housebuilder Cala For $1 Billion With Rothschild's Help

By Thea Felicity

Mar 18, 2024 12:47 PM EDT

BRISTOL, ENGLAND - OCTOBER 08: New houses are constructed on a housing estate on October 8, 2014 in Bristol, England. On the first anniversary of the introduction of second phase of the Help to Buy scheme which provides a government partial guarantee on high loan-to-value mortgages a new survey from the The Centre for Economics and Business Research (CEBR) claims that house prices in 2015 are set for their first decline since 2011.
(Photo : Photo by Matt Cardy/Getty Images)

Legal & General (L&G), one of Britain's prominent financial institutions, is in the process of initiating the sale of Cala Group, a major housebuilder. Rothschild is being lined up to facilitate the auction process. 

This move, reported by Sky News, signifies a major shift in direction for L&G under the leadership of its newly appointed CEO, Antonio Simoes, who recently succeeded Sir Nigel Wilson.

This decision to explore the sale of Cala represents a departure from previous assertions by L&G, which had previously denied any intention to divest the business. 

However, the evolving market dynamics and strategic imperatives may have prompted a reassessment of its portfolio strategy. L&G's move to engage Rothschild to oversee the sale process indicates a thorough and strategic approach to maximizing shareholder value.

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What Happens After Legal & General Sells Cala Group?

The potential sale of Cala could fetch a substantial sum, with industry analysts estimating its value to be as high as £750 million ($1 billion). This high valuation refers to Cala's strong position and worth within the housebuilder industry. 

Antonio Simoes, drawing from his extensive experience at financial powerhouses such as HSBC and Santander, has voiced his belief in Cala's promising future. During recent financial discussions, he described it as "a very strong business" despite a decrease in half-year profits due to market conditions. 

Simoes maintains an optimistic outlook regarding Cala's long-term growth potential, especially with an ambitious goal of building 3,000 homes each year.

The fact that Cala Group was not among the housebuilders implicated in the recent Competition and Markets Authority investigation is significant, indicating that the company has upheld compliance and integrity in its operations. 

As Legal & General moves forward with its plans to sell Cala, industry observers will keenly watch for updates to gauge the implications for both entities and the wider real estate market.

As of this reporting, Legal & General has not provided official comment on the potential sale, indicating that discussions are ongoing. 

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