Peter Askew, chief executive of Pegasus Retirement Homes, has put the company on the market for an estimated £100m.
Listed rival Wren Homes is among the likely bidders for the Cheltenham-based retirement housing developer, which is often cited as the closest competitor to market leader McCarthy & Stone.
Pegasus, which has a projected turnover of about £45m for the current financial year, has been offered to housebuilders and venture capitalists by financial consultant Deloitte & Touche for the past month.
It is understood that bidders had to enter offers by this Wednesday, and a deal was hoped to be concluded next month. Wren was expected to place an offer, but a second rumoured bidder, David Wilson Retirement Living, has ruled out a move. This is because its parent, Wilson Bowden, is currently being taken over by rival Barratt, putting a hold on any large purchases.
Pegasus may also become a target for venture capitalists, continuing a trend that last September led to McCarthy & Stone’s sale for £1.1bn by a consortium including entrepreneur Sir Tom Hunter, the billionaire Reuben brothers, and HBOS.
Several market sources have suggested that Pegasus’ £100m price tag, which is understood to cover its estimated £66m debt, could prove too high.
Pegasus is not worth that. I can’t imagine any of the mainstream housebuilders going for it
A market source
One said: “Pegasus is not worth that. I can’t imagine any of the mainstream housebuilders going for it – the mainstream boys don’t like retirement housing for various reasons, such as not being able to phase the opening of schemes in the normal way.”
A second source said that the business was probably worth about £70m.
Pegasus completed its first development in 1984 and has worked in 53 locations across the country. Askew was a regional managing director at McCarthy & Stone, before he moved to Pegasus in 1998.
David Jones, a partner at Deloitte & Touche acting for Pegasus on the sale, said that neither he nor the business were prepared to comment.
The retirement homes market is currently proving attractive to investors, as firms in the sector hope to reap the benefits of an affluent and expanding generation of retirees. The sector’s appeal has also been boosted by the price of the McCarthy & Stone sale, which analysts have predicted will increase the attractiveness of other firms in the market.