MGPA has bought residential land assembly company Land Investment Holdings in its ﬁrst UK deal for several years. The company was put up for sale in February. The price values the business at £87m and was bid up by competition from a second real estate private equity bidder, Carlyle Group.
MGPA is paying £52.5m in cash from MGPA Europe Fund III. Lloyds Banking Group, which owns the vendor, Clerical Medical, will retain the £34.5m of cash in LIH. Clerical Medical is being sold to Bank of New York Mellon.
Simon Marriott, head of UK acquisitions at MGPA, said: “We are not calling the bottom of the residential land market, but this is a play on land, which is naturally geared, at a time when it is competitively priced.
“The portfolio includes very good assets that we can make money on, but there is distress in the residential land market and LIH also gives us a very skilled team. Putting our team with theirs gives us the ability to build up a strong platform.”
LIH has 10 staff, headed by Henry Richards, and 30 sites from Kilmarnock to Poole, totalling 2,500 acres. Marriott said MGPA had told its investors it was taking a ﬁve-to-seven-year view on LIH. “It is development, the purest form of adding value, so proﬁts will be lumpy,” he added. Savills advised LIH on the sale.