Case Study: Westleigh

02-01-2023

Developing firm foundations through organic growth for leading housebuilders – Westleigh is a leading housebuilder that delivers affordable homes to Registered Providers (RPs) across the Midlands and South Yorkshire.

Regional strength and expansion ambitions – The company was founded in 1985 by husband and wife team, Chris and Judy Beighton. Chris and the team had built a highly successful business that was well placed to benefit from the high demand for affordable housing and was eager to further expand across the UK from its East Midlands base. Due to the resources, contacts and capital that private equity investment can provide, coupled with our knowledge of the affordable housing sector, the team concluded that Palatine would be the best investor to help them achieve their expansion plans.

In July 2016, we invested £20.9m in return for a 45% equity stake in a move that saw Managing Partner Gary Tipper and Investment Director Richard Thomas join the board as non-executive directors. The deal allowed Chris Beighton to move from CEO to Chairman of the business, with Ian Jones promoted from Commercial Director to CEO.

We were attracted by the company’s entrepreneurial management team, which had demonstrated its ability to grow the business into a market leader across the region for affordable housing development. Geographical expansion was at the heart of Westleigh’s growth strategy, and the company recognised that recruiting experienced teams to enable the new sites to scale quickly was essential.

Creating value on the bottom line – Following our investment, Westleigh broadened its geographical coverage beyond the East Midlands, expanding its West Midlands office and opening a new office in Yorkshire. We introduced a new CFO with significant prior private equity experience at the time of our investment. She supplemented the existing management team’s operational expertise and improved financial procedures through enhanced financial and KPI reporting and tighter control of the company’s working capital cycle. This resulted in a significantly higher level of cash generation in the business.

Our value creation plan identified production improvements at Westleigh’s timber frame factory, which increased margin contribution from £1m to £2m. In addition, a supply chain review increased transparency and visibility of projects for sub-contractors. Under our investment, turnover rose from circa £90m in 2016 to £135m in 2018, while EBITDA increased from circa £9m to £16m.

Paving the way for sale – In addition to introducing a new CFO, we introduced a non-executive director, Richard Cherry. Richard was a former Director at Countryside plc, with extensive strategic experience in the sector and the potential buyer pool.

Twenty-one months after our investment, Westleigh was bought by Countryside plc in a £135m deal. The deal saw Palatine exit the business with a returns multiple of 3x and an IRR of 90%.

Palatine have supported management’s ambitious expansion plans for growth. While always remaining diligent, Palatine have allowed management to run the business and progress matters without clunky, time-consuming approval processes that would have removed the business’s ability to be reactive to opportunities which give it the edge over its competitors.

Chris Beighton

Founder & Chairman at Westleigh