Legal & General has agreed to sell housebuilder group Cala for an enterprise value of £1.35bn, to Ferguson Bidco Limited, an entity owned by funds managed by Sixth Street Partners and Patron Capital.

The consideration will result in cash proceeds of £1.16bn after adjustment for net debt, of which £500m will be paid at closing with the remaining consideration being paid over the next five years on a deferred non-contingent basis.

L&G said the disposal reflects a “disciplined approach” to capital allocation and follows its decision announced in June to create a corporate investments unit.

In its most recent half-year results, Cala had a net asset value of £1.15bn and generated operating profits of £42m. Its sale has reduced L&G’s solvency capital requirement (SCR) by £100m after diversification.

“Cala has been an important part of L&G for over a decade, with profits increasing tenfold since our initial investment in 2013,” group CEO of L&G, António Simões, said.

L&G has also revealed that its board will consider the proceeds as part of the group’s announced intention to increase returns to shareholders through ongoing buybacks.

“The sale announced today will provide capital to deliver our strategic goals of sustainable growth alongside enhanced returns for shareholders,” Simões continued. “I would like to thank the whole Cala team for their contribution to the Group and wish them every success in the future.”

Cala CEO, Kevin Whitaker, said: “The acquisition by Sixth Street Partners and Patron Capital demonstrates confidence in Cala’s business plan and growth potential, as our talented team continues to build high quality, sustainable new homes throughout the UK.”

Co-chief investment officer of Sixth Street, Julian Salisbury, added: “We, together with Patron Capital, look forward to continuing to support Cala and its management team, not only with capital but also with the significant resources of our London-based real estate investment team.”

L&G is expecting to complete the transaction in Q4 2024.

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