By Mark Kleinman, City Editor
A group of private equity firms are circling a major housebuilding firm owned by Lloyds Banking Group, as investors seek to exploit the benefits of the Government's Help to Buy scheme and the wider availability of mortgage finance.
Sky News has learnt that Avant Homes appointed investment bankers from Rothschild in recent days to oversee an auction of the company that will begin during the course of next year.
Lloyds, which owns a 100% economic interest in Avant, is supportive of the decision to launch a sale of the company, which is likely to generate a return for it of more than £100m. Last year, the bank refinanced £455m of its borrowing facilities, giving the company until next year to repay its loans.
Private equity groups including Electra Partners are already understood to be drawing up plans to bid for Avant, whose flagship developments include Quartermile luxury residential properties in Edinburgh, insiders said on Monday.
Avant was previously known as Gladedale, and has a significant presence in both the residential and commercial property sectors.
Like many other housebuilders, it is understood to have seen a sharp upturn in business because of the broader availability of mortgage finance and the advent of the Government's Help To Buy initiative, which has sparked concerns in some quarters about a potential housing market bubble.
Based in Dunfermline, Avant expanded rapidly under its founder Remo Dipre to become one of the UK's 10 largest housebuilders in 2006. Mr Dipre quit the company in 2009 amid a debt-for-equity swap which involved Lloyds writing off approximately £500m of outstanding loans.
Through its rescue of HBOS - a deal that led to it becoming 43%-owned by UK taxpayers - Lloyds ended up as the owner of a string of housebuilders which over-expanded before the financial crisis.
Many have since been restructured or sold, including Countryside Properties, McCarthy & Stone and Cala Homes.
Cala, also headquartered in Scotland, was bought by a joint venture between Legal & General, the insurer, and Patron Capital, the private equity group, in a £210m deal.
Countryside sold a large stake to Oaktree Capital, another investment firm, in February, while Crest Nicholson, a larger rival, floated on the London stock exchange earlier this year.
The flurry of sales involving housebuilding groups backed by Lloyds underlines the extent to which HBOS became embroiled in excessive lending to the sector during the boom which preceded the financial crisis, a trend criticised in a report this year by the Parliamentary Commission on Banking Standards.
Assuming Lloyds successfully sells its stake in Gladedale, it would be the last remaining equity stake in a major housebuilder to be removed from the bank's books.
Avant declined to comment.
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