L&G, Patron form social impact RE partnership

In their second tie-up, the UK insurer and London-based private equity real estate arm, have formed a partnership aimed at making £20m to £200m investments in real estate and infrastructure deals that bring with it a positive social impact.

Legal & General Capital (LGC), the principal investment management business of UK insurer Legal & General (L&G), and Patron Capital, the London-based private equity real estate firm, have teamed up for a social impact real estate investment partnership.

The two organizations announced today they would seek to collaborate on long-term, operational, real estate and infrastructure assets that can help make a “positive social impact”. Deals for their partnership, named Perpetual Opportunities Partnership, will be sourced by Patron, which also will provide day to day investment management services.

They are expected to be valued at between £20 million (€25.4 million; $313 million) and £200 million of equity each.

The initiative is intended to take in investments across the UK and Ireland, with capital largely coming from LGC, although Patron also will take minority positions in deals. The partnership will be open-ended in nature, enabling the partners to retain the assets for the medium to long term.

The transactions undertaken for the partnership will not fit with “the opportunistic criteria” for Patron’s traditional, opportunistic fund series, nor will they conflict with L&G’s established direct investment business, the partners said in the announcement.

The partnership is the second between L&G and Patron after they joined forces last March to buy CALA Group, a UK house builder, in a deal which valued the company at £210 million.

Keith Breslauer, Patron’s managing director, said the new tie-up would permit it to access a greater proportion of a €9 billion investment pipeline that it reviews each year. 

He said: “Having a very positive joint partnership with Legal & General Capital via our origination of the CALA Homes transaction, we are very pleased to establish this second partnership to target long-term operational, people-dependent, real estate investment opportunities.”

He added: “Corporate Social Responsibility is an integral part of the Patron approach, and this new partnership will enable us to make investments that will positively impact local communities through improving social infrastructure across the UK and Ireland.”

Paul Stanworth, managing director, Legal & General Capital, said: “Legal & General is committed to being economically and socially useful to our communities. We believe that by taking a flexible, strategic approach to investing in housing and social infrastructure, we will not only offer our shareholders attractive risk-adjusted returns but also drive UK economic growth and contribute in a significant way to enhancing UK living standards.”