Blackstone division buys controlling stake in UK homebuilder

Blackstone’s credit business GSO Capital Partners has injected The Miller Group with £160m of capital, resulting in a roughly 50 percent ownership stake in the largest privately-owned homebuilder in the UK.

A division of The Blackstone Group has acquired a controlling ownership stake in The Miller Group after injecting new equity capital into the largest privately-owned UK homebuilder. 

According to a statement by The Miller Group, Blackstone’s credit business GSO Capital Partners will inject £160 million ($248.5 million; €190.74 million) of capital into the troubled Edinburgh-based developer. In addition to the new capital, GSO Capital will also help to refinance The Miller Group’s existing £600 million debts with new five-year committed facilities. 

Various media reports have stated that this cash injection will give GSO Capital a stake of about 50 to 55 percent stake in The Miller Group, which has become burdened by its debt obligations. Blackstone’s investment, the initial proposal of which was announced in July, gives The Miller Group the opportunity to develop and expand its operations.

The Miller Group’s lenders include Lloyds Banking Group, Royal Bank of Scotland and National Australia Bank.

The funding deal was agreed five months after The Miller Group was first revealed to be in talks with Blackstone. The New York-based private equity giant is understood to want to use The Miller Group as a means of consolidating the UK homebuilding sector by acquiring struggling competitors. This is Blackstone’s first investment in a UK homebuilder. 

Miller Group chief executive officer Keith Miller said in a statement this refinancing will provide the firm “with substantial extra muscle to take advantage of the many opportunities offered by the current economic cycle”. 

Prior to the transaction, The Miller Group, which was founded by the CEO’s father and uncle in 1934, was roughly 60 percent owned by the Miller family. Now, the total stake held by family members will be reduced to around 30 percent. In addition, the transaction means that Lloyds Banking Group, which has owned 20 percent of the company, will now have a diluted stake. PERE understands that Miller will continue to lead the firm and the management team will remain in place.

GSO Capital is one of the largest credit-oriented alternative asset managers in the world with $28.7 billion in assets under management as of 30 September. Blackstone acquired the platform in 2008.

A spokesperson for Blackstone said that this transaction was done through its credit arm because GSO specializes in rescue financing. Additionally, Blackstone doesn’t consider the investment a traditional private equity real estate deal.