Group restructures ahead of hunt for new funding for Willmott Residential
Willmott Dixon has spun out its housing business with the aim of attracting new investment next year to turbo charge its growth.
The firm had already re-launched its housing business in May this year under the Willmott Residential brand and the leadership of former Berkeley Group executive Nic Simpkin, in a move widely seen as a precursor to a potential float of the division on the London stock exchange.
Now Willmott Residential has been spun out as a standalone “sister business” to Willmott Dixon’s main construction and interiors business. It will no longer report to umbrella group company Willmott Dixon Holdings, although it will remain owned and controlled by the Willmott family - at least for now.
Willmott Dixon also announced it has spun out its support services division - recently rebranded as Fortem - after failing to find a buyer for it earlier this year.
Speaking to Building, Willmott Dixon group chief executive Rick Willmott (pictured) said Willmott Residential expected to secure a new “minority” investor next year as part of a “first phase” funding round to help fuel its push into the build to rent sector and delivery of its 7,500 home pipeline. Willmott did not rule out a potential float down the line, but said this would not happen next year as part of the first funding round.
He said: “We have an aspiration to attract third party capital into Willmott Residential… It will involve equity and an investor taking a minority stake and we hope to complete this next year.”
Commenting on the possibility of an initial public offering (IPO) on the stock exchange for the residential business in future, Willmott said: “It all depends on the [first round] partner to be honest. The beauty of being a private business is we can weigh up all the options. We wouldn’t rule anything in or out.
“After phase one, where that takes us depends on the market. If for instance there’s a massive government push on PRS in the forthcoming housing white paper that could accelerates things.”
Willmott Dixon sought expressions of interest in buying its support services business earlier this year, but shelved the plan in June after proposals failed to live up to its expectations. Last month it rebranded the business as Fortem.
Commenting on the decision to also spin out this business, Willmott said: “The market wasn’t ready [to buy it] and didn’t understand the offer and the business. We have decided to hang on to it and make it better.”
Willmott said he “wouldn’t rule out” a potential sale of Fortem, but added: “We are not out there looking to sell it”.
In a snapshot of its financial results for the first half of this year to June, Willmott Dixon said pre-tax profit across all three businesses increased 48% to £12m, up from £8.1m the previous year. Turnover stood at £600m, while its forward order book hit £1.15bn. Results for the three businesses will be reported separately from now on.