McCarthy & Stone unveils IPO to fund housing boom for 'last-time buyers'
10-18-2015
McCarthy & Stone unveils IPO to fund housing boom for 'last-time buyers'
Housing firm is returning to the London stock market after almost a decade in private hands
By Marion Dakers
McCarthy & Stone has laid the foundations for a return to the London stock market almost a decade after it was taken private and six years after it was swallowed by its lenders.
The company, which builds retirement housing across the UK, has announced its intention to float in London next month to raise £70m for an ambitious construction drive over the next few years.
McCarthy & Stone said it had 70pc of the market for owner-occupied homes designed with pensioners in mind. The firm has sold 50,000 units across 1,000 development sites since its foundation in 1977 and caters to the "last-time buyer" market.
According to recent research by Legal & General, just 2pc of the country’s housing stock has been built specifically for older people, while 3.3m people over the age of 55 would struggle to downsize their home because of a shortage of suitable properties.
McCarthy & Stone intends to tap into this market by investing £2.5bn in land and building projects over the next four years, raising its yearly completion rate from 1,923 homes this year to 3,000 per year.
“There is a structural under-supply of specialist retirement housing in the UK and McCarthy & Stone has the expertise, track record and financial strength to address this need,” said Clive Fenton, chief executive.
The IPO marks the second time on the stock market for McCarthy & Stone and is the culmination of almost six years of work to turn its fortunes around after it was almost sunk by its debts.
McCarthy & Stone was taken private for £1bn in 2006 and restructured in 2009 after the bottom fell out of the housing market, leaving fewer older people able to cash in on their family homes to buy a retirement property.
Lenders including Lloyds Banking Group took control of the firm in a debt-for-equity swap, before selling it on to other investors including Goldman Sachs, TPG, Anchorage and Alchemy Partners.
McCarthy & Stone has hired a number of bankers and advisers to work on the float. Deutsche Bank, Goldman Sachs, Jefferies, Peel Hunt and Rothschild are all playing a role. Private equity firm Bridgepoint expressed an interest in buying the firm ahead of the float, although the company's management said they have been more focused on an autumn IPO.
"We think we're an attractive company and while going through this process - which was probably the world's worst kept secret - we've attracted some interest from other people. We've never discouraged it, but we've also been set on a stock market float," said Mr Fenton.
"We set out on this track to put the company on the London Stock Exchange as we felt it was the natural place for us. We were listed for 22 years and did very well here."
Crest Nicholson, Foxtons and Countrywide are among the property companies to have joined the stock market in recent years as the real estate market has recovered. A rush to the London market in recent weeks has seen firms including Hastings, Worldpay and Equiniti vie to raise hundreds of millions of pounds between them.