Graphite Capital, a UK mid-market private equity specialist, is funding the development of London Square, a new house-builder focused on prime sites within the M25.
The company has been formed to capitalise on the recovery in the London housing market.
Graphite will provide up to GBP50m of equity capital for a majority share in the new company. Together with a further GBP50m of senior bank debt, the total funding package is expected to be GBP100m.
London Square is led by Adam Lawrence, a house-builder with over 20 years’ experience of house-building within London and the south east. He spent the last 13 years at Barratt Developments, where he created and ran the West London division, now a major contributor to group profits. His most recent role was as regional chairman of the London and Thames Gateway division.
Lawrence is building a management team which currently includes land director Brian Betsy, who previously held the same role at house-builder Fairview Homes.
Within the next five years, London Square aims to be building 600 homes a year. It will develop a range of schemes with private and affordable housing units at prices ranging from GBP200,000 to GBP1.5m.
While the UK house building market is at a cyclical low, the longer term drivers are favourable. Land prices have fallen significantly from their peak in 2007 and are forecast to remain low for the next few years. Housing supply in London is also significantly constrained due to a drop-off in development starts since 2007 and tightening credit markets, while demand should grow as mortgage availability improves.
Lawrence says: “While the London and south east housing markets are showing signs of recovery, there remains a strong pipeline of new opportunities, including distressed land sales from financial and government institutions. We are delighted to benefit from Graphite’s financial support and its experience in growing businesses.”
Graphite partner Mike Innes adds: “Adam has an exceptional track record of successful and profitable residential development in London. This is a good opportunity to back an excellent team at a favourable point in the cycle.”
