Private equity baron Guy Hands purchases Kier’s £ 110m house building arm
- Kier Living was sold to Foster BidCo, a newly formed company owned by Guy Hands
- Hands is the head of the private equity firm Terra Firma, which he founded in 2002
- The sale includes over 4,600 properties and investments in joint ventures
Government entrepreneur Kier has sold his house building arm to private equity baron Guy Hands for £ 110 million.
The construction company announced the deal on Friday and agreed to sell its Keir Living business to a newly formed company called Foster BidCo, owned by the billionaire investor.
Hands, the founder and head of private equity firm Terra Firma, which has lived in Guernsey for tax reasons since 2009, said he was “pleased” to buy the company, which has “significant growth potential”.
Deal: Private equity baron Guy Hands said Kier Living has “significant growth potential”.
Private equity firms are notorious for drastically cutting and debting the companies they bought before reselling them for more money.
Kier, who had a turnaround as he struggled to reduce his debt, said the sale was a milestone in his strategy to simplify business and strengthen his balance sheet.
The contractor is known for building schools and roads for the government. An eight-year maintenance contract was recently signed with Transport for London.
Kier Living is the housing division operating “in four of the most affordable areas of England” building “affordable, low-rise, suburban mixed-life family homes”.
The sale includes the land bank with 4,677 properties, which, according to Kier, represent a land supply of around three years, based on the business with around 1,600 apartments per year.
Kier Living typically purchases land on which to build houses through joint ventures. In 2018 the company partnered with Homes England and Cross Keys to develop 5,400 homes over the next 10 years.
The group said that Kier Living’s stake in such companies – including one with Cross Keys announced in east England in 2017 and one with Together Housing announced in 2016 – will be sold to Hands.
“The interest of the Kier Living Group in these joint ventures (and the portion of the debt) will be indirectly transferred to the buyer after closing,” the group said in a statement.
Kier also agreed to provide “transitional services for a limited time” upon conclusion of the contract, including “joint financial services, joint HR services, procurement services and IT services”.
The deal is expected to close in mid-June.
“Affordable” houses: The sale includes Kier Living’s land bank with 4,677 properties, which, according to the company, represents a land supply of around three years
Hands heads Terra Firma, the company he founded in 2002 that inked the billions of pounds in deals including buying and selling Odeon and William Hill.
His disastrous takeover of the music label EMI and the subsequent legal dogfight with Citigroup left a £ 1.75 billion hole in his fund and almost put him under pressure.
In 2012, he bought the Four Seasons chain for £ 825 million before losing control to the largest creditor in 2017. Critics have argued that private equity firms are too short-term to invest in nursing homes.
“We are very excited to acquire the Kier Living business, which operates in the sweet spot of the real estate market, delivering affordable homes in areas of high demand,” he said in a statement Friday.
“After Covid, more and more people are thinking about where to live with an emphasis on having their own space, including more bedrooms and outdoor living areas.
“We believe the company has significant growth potential under a new, refreshed brand and can play a critical role in delivering much-needed housing in communities across the UK.”