Goldman Sachs-backed TopHat gets fresh £65m injection as it plans second factory
News, views and more from the modular construction space
Welcome back to Modular Monitor after a summer break.
The MMC space continues to provide plenty of headlines and this issue we focus on the latest from TopHat.
Like its peer Ilke Homes, TopHat is finding it tough financially as a start-up. But fortunately it has deep-pocketed backers in the form of Goldman Sachs.
TopHat’s accounts show that its immediate parent has injected an extra £65m into the business.
Like Ilke, TopHat is brushing off its losses by continuing to talk up its ambitions, with plans for a second factory.
It is a slow build for these companies. And, for now, they have patient backers. How long will it last?
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*NEWS*
TopHat takes an extra £65m as its reports more losses
TopHat, the Goldman Sachs-backed offsite specialist, has received a £65m share capital boost from its parent company as its makes plans for a 3,000-home capacity second factory.
The Derby-based firm received the share capital from its immediate parent, which is Jersey-based TopHat Industries Ltd. Its ultimate parent is US investment bank Goldman Sachs, which backed TopHat with a £75m three-year bond agreement in March 2019.
TopHat said the new funds would be used to pay off existing group loans.
The fresh backing was revealed in TopHat’s latest accounts, which also showed it had fallen to another significant loss. In the year to the end of October 2020, TopHat Industries recorded a post-tax loss of £21.3m off a turnover of £6.3m. The new funding came after the end of the reporting period.
Despite the losses, TopHat said its pipeline was building “strongly” which had given its board “confidence to progress planning for a second factory which will have a capacity of over 3,000 homes”. Its current factory in Derby has a capacity for around 1,000 homes.
The group has deals to deliver homes with BoKlok, the Skanska/Ikea JV, and Urban & Civic.
Andrew Shepherd, TopHat’s managing director, previously told Modular Monitor in January that plans for a second factory were still “very much in the discussion phase” with no definite dates for “getting a shovel in the ground”.
On the most recent financial performance, a TopHat spokesperson said:
“This year TopHat has invested significantly in the technology behind the business, enabling sustainable growth.
“The year has also been impacted by Covid, but despite this, we have kept our growth trajectory on plan and continue to build a pipeline of thousands of homes.”
TopHat has also installed a new chief financial officer to replace Gerald Reichmann, who left earlier this year after less than two years with the firm.
Paul Buddin has joined TopHat from British supercar manufacturer McLaren, where he was CFO. Prior to that he worked for KPMG.
*OFFCUTS*
PEOPLE: A senior Ilke Homes’ executive has jumped ship to housebuilder Countryside. Matthew Bench, who spent just under two years at Ilke, has taken the role of group chief investment officer at the FTSE-250 firm. Countryside already has two MMC factories and plans to open a third this summer. (Read a previous interview with Bench here).
SOCIAL HOUSING: Giant housing association Hyde has signalled it will need to replace some of its existing homes with “modern, energy efficient” properties to meet decarbonisation targets. In its annual report, published today, Hyde revealed that around two thirds of its general needs social homes - 19,000 - are currently EPC ‘C’ or above. All social homes must be EPC ‘C’ by 2035 as part of a government target. “Our aim is for all our EPC rated D, E, F and G homes to either be improved to EPC band C or we’ll replace them with modern, energy efficient homes,” Hyde said.
COMPANIES: Modular housebuilder CoreHaus has opened its first manufacturing facility in County Durham. The 20,000 sqft facility is aiming to produce around 1,000 steel-framed modular homes a year. Around 300 people are expected to be employed across the business.
*NUMBER CRUNCH: £250m*
The amount the Welsh government has committed to spend on building 20,000 new low carbon homes for social rent.
*INSIGHT*
“A few months ago I was involved in a workshop with nine FDs from different housing associations and local authorities. Sitting around our virtual table, they told me that the risks around modular homes are now no greater than those associated with traditional construction.”
The tide is changing on MMC among housing association FDs, according to Jake Snell, strategic asset and land manager, Abri, in a piece for Social Housing.
*AND FINALLY…*
See how Chinese developer, Broad Group, built a 10-storey modular building in a day…
I’m James Wilmore, a freelance journalist and editor. I cover the built environment and occasionally cycling. This is me here and here
For all enquiries, story ideas and tips, please email: james@modularmonitor.co.uk