Breaking: Ilke Homes pauses operations as it seeks buyer
Volatile macro-economic conditions and planning issues blamed
Ilke Homes has confirmed its owners are exploring a sale of the business and is pausing its operations as it conducts a strategic review.
The Yorkshire-based firm said “volatile macro-economic conditions” and issues with the planning system “complicate fundraising and housing delivery”.
In an emailed statement to Modular Monitor, Ilke said: “The company and its advisers have been exploring fundraising options and the existing backers are hopeful of securing a future for the business via a sale or investment, to enable it to deliver on its 4,200-home pipeline and protect its workforce.”
In its last filed accounts, Ilke Homes Holdings said it employed 528 staff, including 315 factory workers. It operates from a 250,000 sqft factory in Knaresborough, North Yorkshire.
The firm, which is owned by private equity giant TDR Capital, said it requires “new investment to meet overheads, achieve further scale and become cash flow positive”.
Like its peers in the volumetric modular space, Ilke has racked up significant losses since its launch in 2017. In its last reported full-year to the end of March 2021, Ilke reported £41m in losses as it blamed the “full force” of the pandemic.
Among Ilke’s other investors are housing associations Places for People, which it signed a £100m deal with in 2019, and Guinness. Homes England has also agreed loan deals with Ilke.
The shock announcement comes just six months after Ilke revealed it had raised £100m from a new shareholder and existing stakeholders. However it was reported last week that an extra funding deal that was due to complete in March had fallen through.
Ilke’s latest accounts are also overdue at Companies House. However a move by Companies House to strike Ilke Homes Limited off its register has been discontinued.
The news follows Legal & General announcing last month it was halting production at its giant Yorkshire factory, leaving the “majority” of it 475 staff at risk of redundancy.
The head of category 1 MMC trade body Make UK Modular also left last month, Modular Monitor revealed.
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Full statement from Ilke Homes
ilke Homes seeks buyer to secure future and deliver 4,200-home pipeline
Process launched to secure additional funding needed to deliver £1 billion order book, most of which is much-needed affordable housing, and protect jobs
Company has pioneered a zero-carbon, zero-bills solution in a bid to tackle the housing and climate crises
Company to pause operations while strategic review is ongoing
LONDON – 12 JUNE, 2023 -ilke Homes, the Yorkshire-based modular house builder, is exploring a sale of the business as volatile macro-economic conditions and issues with the planning system complicate fundraising and housing delivery. A sale would allow the company to deliver its 4,200-home pipeline following triple-digit revenue growth over the last three years.
The company’s £1 billion order book is predominantly made up of affordable homes, meaning that without a new investor, much-needed housing will not be delivered.
Established five years ago, ilke Homes’ client base includes major institutional investors, housing associations, volume housebuilders and local authorities, who were attracted by the company’s ability to accelerate the delivery of high-quality, sustainable housing from its 250,000 sq. ft factory in Knaresborough, North Yorkshire.
The company and its advisers have been exploring fundraising options and the existing backers are hopeful of securing a future for the business via a sale or investment, to enable it to deliver on its 4,200-home pipeline and protect its workforce.
Ilke Homes proposition
Ilke’s factory harnesses digital design and precision-manufacturing techniques to produce NHBC-accredited homes that are zero-carbon in operation and well-designed.
The company has delivered the UK’s first-ever homes to guarantee residents no energy bills as part of its ZERO Bills offering, which was launched as part of a pioneering partnership with Octopus Energy Group in 2022.
In 2020, ilke Homes launched its turnkey development offering, where the company acquires land, secures planning permission and develops the site. This has been complicated by uncertainty over planning policy and rising build costs.
While having delivered strong contribution margins, ilke Homes now requires new investment to meet overheads, achieve further scale and become cash flow positive.
Market conditions
The wider UK housing market has been hit by rapidly rising interest rates, which has reduced demand and resulted in housing starts falling below pre-pandemic levels.
Official government figures have also revealed that planning applications in England have fallen to their lowest level in at least 16 years, thanks to uncertainty over planning policy and heightened build costs, highlighting the scale of the challenge in improving housing delivery.
Industry and government net zero targets, combined with cost-of-living crisis, have meant that there is a growing focus on improving the quality of the UK’s housing stock.
Construction techniques have remained unchanged for the last 100 years, resulting in deficiencies in build quality and energy performance.
I’m James Wilmore, a freelance journalist and editor who covers the built environment. This is me here and here
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