AYRSHIRE entrepreneur Sir Tom Hunter has sold Inpartnership, which is engaged in major property-related regeneration projects in England, to Scottish investment company Sigma Capital.
The deal struck with Edinburgh-based Sigma for Inpartnership, in which Lloyds Banking Group’s HBOS subsidiary also had an interest, will give Sir Tom’s West Coast Capital investment vehicle a share of future development profits generated by the business which it has sold. And it will increase West Coast Capital’s stake in Sigma from 20% to 22%.
Sigma said the total development value of opportunities within three long-term regeneration partnerships formed by Inpartnership with major English local authorities was estimated at more than £2 billion.
And Sigma chief executive Graham Barnet declared that his company’s “additional skills” and “greater access to finance” should “unlock significantly more of the value” within the partnerships.
The price being paid by Sigma for Inpartnership is £347,000, comprising 2.17 million new Sigma Ordinary shares issued at a price of 16p each. This issue price is more than double Sigma’s close of 7.5p on Friday. Sigma shares rose 2p or 26.7% to 9.5p yesterday.
Sigma said that, out of the first £10m of future development profit generated by Inpartnership’s existing projects, it would receive a minimum of £6.9m and West Coast Capital would be entitled to a maximum of £3.1m.
West Coast Capital will, after this first £10m, be entitled to a 10% share of any further development profit from Inpartnership’s existing projects, in perpetuity.
Inpartnership is engaged in major regeneration projects in Liverpool, at North Solihull near Birmingham, and at Salford on the outskirts of Manchester.
Sir Tom bought into Inpartnership, alongside Bank of Scotland parent HBOS, in 2007.
A spokesman for Sir Tom said the sale of Inpartnership to Sigma would be “cash neutral” for West Coast Capital.
Inpartnership was founded about 10 years ago by Duncan Sutherland and Graeme Hogg to create long-term, asset-backed partnerships with the public sector. The business, which Sigma said was “working as a bridge between public and private sector organisations”, has secured partnerships with Liverpool City Council, Solihull Metropolitan Borough Council, and Salford City Council, ranging from 10 to 20 years’ duration.
Sigma noted that the partnerships “hold long-term option arrangements with the respective local authorities for a mix of residential, commercial, education, and health opportunities”.
It added: “In total, the partnerships provide for the delivery of around 10,000 new homes, a significant number of new retail centres, health (and) medical centres, schools, and (a) mix of retail (and) leisure facilities.”
Mr Barnet, hinting at further deals with Sir Tom, said: “The acquisition of Inpartnership represents an exciting and significant step forward for Sigma. We have been working with our largest shareholder, West Coast Capital, on a number of material property-related initiatives and the acquisition of Inpartnership brings the first of these initiatives to fruition. Inpartnership expands Sigma’s property development and investment activities, bringing... partnerships with three major UK local authorities.
“We see exciting potential in each partnership, with the total development value of the opportunities estimated at over £2bn.”
He added: “We believe that the additional skills the Sigma team can bring to these opportunities, as well as greater access to finance, will unlock significantly more of the value that is inherent within the partnerships.”
Sigma said Mr Sutherland and Mr Hogg would remain as directors of Inpartnership. And Sigma, which also has a big venture capital business, yesterday appointed John Hamilton and Gwynn Thomson, directors of its property subsidiary, to its board to reflect its increasing focus on property.
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