The £60 million raise is split between £30 million debt from government agency Homes England and £30 million of equity from multiple new investors.
The Guinness Partnership, one of the UK’s largest providers of affordable housing and a customer of ilke Homes, is one of the new equity investors. The housing association has signed two deals with ilke Homes in the last year, for sites that will deliver 250 factory-built homes.
Tech-focused family office Middleton Enterprises and private equity firm Sun Capital have also taken equity stakes. TDR Capital has also injected further equity.
The £30 million of debt comes via a facility from Homes England’s Home Building Fund. The government’s housing agency invested an initial £30 million into ilke Homes back in 2019, which marked the first time the agency had ever directly invested to boost an offsite manufacturer’s production capacity.
This latest round demonstrates that ministers remain prepared to take genuinely innovative steps to intervene in the housing crisis by creating meaningful supply-side incentives to increase housebuilding capacity.
The announcement comes at a time when the government is championing offsite manufacturing as a solution to ramping up the delivery of high-quality, energy-efficient housing across the UK to tackle climate change and acute housing shortages.
Stephen Stone, a board member of ilke Homes who floated FTSE 250 housebuilder Crest Nicholson in 2013 while CEO, says the move proves there is ‘a shared ambition among the public and private sectors to find innovative solutions to structural issues that have dogged the construction and housebuilding industries for decades’.
“This new funding will help us create hundreds more highly-skilled, green jobs for an economy that is gearing up for a Green Industrial Revolution,” he says. “The fact that our own clients continue to either invest or increase their stakes in the company is testament to the dynamic approach ilke Homes has taken to house building in the last three years.”
He explains that investors are being faced with regulatory pressures and a requirement to meet ESG criteria and are increasingly scaling up their MMC strategies.
“The new funding will be transformational for ilke Homes, allowing the company to invest heavily in automating more of its manufacturing processes to drive efficiencies, secure more sites and expand its ‘package deal’ strategy, which offers full development service off-site, infrastructure and homes in a rapidly growing market.”
Stone continues: “Both housing associations and build-to-rent operators are looking to scale up delivery of homes over the next few years, and ilke Homes’ potential to deliver modern homes quickly and sustainably is an attractive proposition to these companies.”
The housebuilding industry has historically lacked the capacity and resources to innovate at the pace required to meet the government’s 300,000-new-homes-a-year target, leading to a chronic undersupply of housing in the UK, where over one million families are currently on council waiting lists. In 2019-20, just 220,600 new homes were delivered.
Meanwhile, ministers have adopted the Committee on Climate Change’s (CCC) recommendations that decarbonising the UK’s housing stock will be vital if the UK is to meet its legally binding net-zero targets by 2050.
In a report from 2019, the CCC, the government’s independent adviser on tackling climate change, revealed that emissions produced from heating homes account for 20% of the UK’s total.
Policymakers have drawn up new building regulations to ensure new-build homes built from this year are more energy-efficient. The houses manufactured by ilke Homes already meet and exceed these standards, the firm says.
ilke Homes’ most recent fundraising round follows a year of rapid growth, which has seen the company grow its order book to over £200 million, sign a deal with FTSE 100 firm Boots UK to deliver over 600 homes in Nottingham, and appoint Crest Nicholson’s former chief executive, Patrick Bergin, as chief financial officer.
Burley Road Ltd secures £12.3m finance for Leeds development
Paragon Development Finance has provided a £12.3 million finance facility to Burley Road Ltd to assist with the development of 110 new apartments on the site of the former Burley Liberal Club in Leeds.
The scheme will consist of 104 private and six affordable one, two and three-bedroom apartments spread across two five-storey buildings located where Burley Road meets Willow Road.
The site covers two acres and was also home to a former bank building. This was then occupied by Broadley's decorating division but both this building and the liberal club were later demolished after sitting empty for years.
Building work commenced in February 2021 and is due to complete in August next year. Sales of the apartments have already commenced with North Property Group exchanging on 40 apartments, with a further 26 reserved.
The deal was led on behalf of Paragon by senior relationship director Simon Dekker and senior portfolio manager Craig Seabourne.
Timothy Smith, director of Burley Road Ltd, comments: “This site enjoys an excellent location just minutes away from the city centre and close to Cardigan Fields, which has an array of restaurants and entertainment facilities. The development will regenerate land that has been dormant for many years, breathing new life into the area.”
“Simon and Paragon were very easy to deal with. They are highly experienced and understand the needs of developers, so the process was smooth and structured to meet our requirements.”
Simon Dekker adds: “This scheme complements the local area perfectly and the apartments are already proving popular with buyers. We look forward to working with Timothy and his team as the construction progresses.”
Maven raises £12.7 million for new residential project
Maven Capital Partners, a UK property and private equity manager, has agreed a joint venture (JV) with housebuilder Taggart Homes to develop 150 new-build family homes in Mansfield, Nottinghamshire.
The transaction includes a £3.9 million equity fundraise from Maven’s co-investor syndicate, Maven Investor Partners, alongside a £8.8 million debt facility from Paragon Development Finance.
This marks Maven’s second residential JV project in recent months following the announcement of its partnership with Calmont Homes to build 61 homes at Oak Meadows in the village of Middleton St George, near Darlington.
The 15-acre site is located approximately 1.5 miles to the west of Mansfield town centre within an established residential area and is in close proximity to local schools, amenities and ‘excellent’ commuter links via the M1 motorway.
The development will be delivered over five phases and is expected to take three years to complete. A mix of apartments, terraced, semi-detached and detached family homes are being planned with 120 for private sale, 20 for affordable rent and 10 shared ownership. Total development cost for the project is expected to be £25.9 million.
Richard Elliott, investment director at Maven, says factors such as continuing low-interest rates, government incentive schemes and societal changes associated with the pandemic have all contributed to strong demand for ‘quality, well-located housing stock’.
“The outlook for the sector is positive and we are delighted to partner with Taggart Homes on this new development in Mansfield where I’m sure Taggart’s award-winning product will be well received by homebuyers,” he comments.
Michael Taggart, chief executive officer at Taggart Homes, adds: “Following on from the success of our development in nearby Annesley, Taggart Homes is delighted to be undertaking this development of 150 quality houses which are well located on the eastern side of Mansfield near established transport links and local employment.”
“This year we have also successfully agreed to acquire a further three sites in Nottinghamshire which will deliver a further 155 homes over the next two years. Despite the current pandemic and supply chain challenges we consider the outlook for the housing sector to be extremely positive across the Midlands region where we operate.”
He concludes: “We want to continue to build communities where neighbours become friends, where memories are made and we understand what a huge step buying a new home is, so we always strive to provide the finest quality properties, where luxury meets convenience.”