McCarthy & Stone To Unveil Float Next Week

The UK's largest developer of retirement homes will unveil plans for a £1bn flotation within days despite interest in a takeover from private equity groups.

Sky News understands that advisers to McCarthy & Stone (M&S) are targeting the latter half of next week to announce its intention to float on the London Stock Exchange.

Sources said on Friday that the company was likely to seek to raise around £100m from the issue of new shares in an initial public offering (IPO), with existing investors also selling part of their shareholdings.

The numbers and timings are not yet finalised and could still change.

The float announcement will come despite interest from the buyout firm Bridgepoint and others in a takeover of the housebuilder.

Earlier this week, M&S announced a 40% rise in underlying pre-tax profit of £88.4m for the year to the end of August.

It also said it would expand a target for land investment and building over the next four financial years.

John White, the company's chairman, said: "We continue to capitalise on the increasing demand for specialist retirement housing, driven by a rapidly ageing population and a structural under-supply of this form of accommodation in the UK.

"The group is well-positioned to benefit from this unprecedented market opportunity, and the scale and quality of our land bank provides significant visibility over the medium-term for our potential rapid growth.

"Against this backdrop, we have increased our investment target for land and build to £2.5 billion over the next four years and remain on track to deliver 3,000 specialist retirement apartments per year over the medium term, doubling the size of the business."

Like its rivals, M&S has been boosted by plans announced during the summer for a relaxation of planning rules to enable thousands of new homes to be built on brownfield sites across the UK.

A shortage of housing stock has long been identified as one of Britain's most intractable social and economic headaches, with ministers desperate to unblock supply-side hurdles.

David Cameron and Jeremy Corbyn, the new Labour leader, both sought to address the issue in their party conference speeches during the last ten days.

A sale or flotation of M&S would cap a remarkable turnaround for the company, which was among the housebuilding industry's most prominent victims of the 2008 banking crisis.

Earlier this year, the company reported a 76% rise in half-year pre-tax profit to £32m, on the back of strong sales growth.

M&S, which was among a group of housebuilders which were forced into debt restructurings in the aftermath of the financial crisis, now has ambitious plans to spend billions of pounds on constructing thousands of new homes.

Previously part-owned by the state-backed Lloyds Banking Group, which had been a lender to the company, it was taken over by a consortium of investors including Alchemy Partners, Goldman Sachs and TPG.

Taken private in 2006 in a £1.1bn deal, sources said that a sale or float could now value the company at close to that pre-crisis level, crystallising a handsome profit for the current shareholders.

Last year, M&S recruited a new management team, led by the former Persimmon chief executive Mr White and former Barratt Developments executive Clive Fenton as its chief executive.

Rothschild, the investment bank, is working with M&S's management on the discussions with potential bidders, while Goldman Sachs and Deutsche Bank are among the investment banks handling the float plans.

M&S declined to comment.