Ownership is now being transferred to an entity called Ferguson Bidco Limited, owned by investment firms Sixth Street Partners and Patron Capital.

The sale consideration will result in cash proceeds of £1.16bn for L&G, with £500m of this to be paid at closing with the rest paid out over the next five years.

According to L&G, as of the half year mark Cala had a net asset value of £1.15bn and operating profits of £42m. The group is on track to deliver circa 3,000 homes this year.

L&G first invested in Cala in 2013 but acquired the rest of the housebuilder in 2018, when it was jointly owned by Patron.

For context over how much Cala has grown, in 2017 it delivered 1,677 homes that year.

However, operating profits have been hit as these were £92m in 2017.

Commenting on the transaction, AJ Bell investment director Russ Mould said investors would be “disappointed” the consideration would not be paid in full.

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 “L&G was among the top fallers on the FTSE 100 after announcing the sale of its housebuilding business, Cala,” said Mould. “Investors might be disappointed that it isn’t getting the full £1.16bn cash up front.
 
“L&G’s shares have been weak since its strategy update in June. Therefore, it’s not a surprise to see the company imply it might use some of the sale proceeds to fund share buybacks as it needs to deliver some more positive news to win back the market’s favour.”
 
This transaction is expected to be completed by the end of 2024.

“We look forward to developing a strong partnership with Sixth Street and reigniting the excellent relationship we shared with Patron between 2013 and 2018,” said Kevin Whitaker, CEO of Cala.

“I would like to thank Legal & General for their support since they first invested in Cala. With their backing, Cala has successfully tripled the number of homes we build each year, whilst revenue and profits have grown five- and ten- fold respectively.

Keith Breslauer, managing director and founder of Patron, added:  “We are pleased to be able to back the Cala business once again.

“We look forward to working closely with Cala’s impressive management team and our partner, Sixth Street, to further build the business and help tackle the undersupply of homes in the UK.”