Legal & General Agrees to Buy Stake in Cala Group From Lloyds

Legal & General Group Plc, the biggest manager of U.K. pension assets, said it entered a joint-venture to acquire Scottish homebuilder Cala Group Ltd. from Lloyds Banking Group Plc for 210 million pounds ($317 million).

Legal & General and property investor Patron Capital Advisers LLP will each take a 46.5 percent stake in the business, with Cala’s management acquiring 7 percent, the London-based company said in a statement today. The deal, which is financed with 140 million pounds of equity and 70 million pounds of debt, will contribute to earnings in the first year.

“At our preliminary results, we identified direct investment as one of our five drivers of growth,” Wadham Downing, group mergers and acquisitions and strategy director at Legal & General, said in a statement. “We will continue our evolution as a group by combining our strength in organic growth with selected bolt-on acquisitions.”

Cala had gross assets of 354 million pounds at the end of June and a full-year pretax profit of 11.4 million pounds.

Legal & General on March 6 raised its dividend 20 percent after sales, cash flow and operating profit increased on demand for retirement products. The Cala deal forms part of a strategy to target “socially useful projects” such as housing and transport that deliver high rates of return, it said.