Laing may sell off housebuilding to boost market rating

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The Independent Online

John Laing is close to putting its housebuilding business up for sale with a £300m price tag.

The 150-year-old company would be left with its infrastructure division, which works on public private partnership (PPP) projects.

Reporting 2001 results yesterday, Bill Forrester, the new executive chairman, said he started a strategic review when he took up his post six weeks ago.

Laing has already sold the construction business for which it was famous. The troubled construction unit went last year for just £1. The company is in the process of selling its property development interests, leaving it with housebuilding and infrastructure divisions.

Mr Forrester said the review was still under way and a final decision on the future shape of the company would be announced to shareholders at the company's annual meeting in May.

He said that, because housebuilding and infrastructure work were capital intensive, Laing would find it difficult to grow both activities. The likely split at Laing was revealed by The Independent earlier this year.

Mr Forrester said a housebuilder would never command the sort of stock market valuation he sought. "We don't want the rating of a housebuilder, we want the rating of a faster growing company," he said.

Mr Forrester pointed out that housebuilders, which are not favoured by investors, trade on the market on a multiple of seven or eight times their earnings. The multiples enjoyed by an outsourcing and infrastructure group is likely to be at least double, he said, with some sector players trading on about 40 times earnings. "One option is to remain as we are," he said. "But if we sold homes, we would put the proceeds into our faster growing PPP work.... But we won't give housebuilding away."

Mr Forrester said it was possible housebuilding would be held on to in the short term to provide cashflow while its large infrastructure projects get off the ground.

The homes division has net assets of £308m and the company would seek a disposal price close to this figure. Last year it sold 1,375 units, at an average price of £227,000. Laing's group debt stands at £277m, including £110m of non-recourse debt.

The company's 2001 results showed a loss of £24.7m, compared with a profit of £5.7m the year before, due to the problems in the construction business which made a loss of £94.5m.

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