黑洞社区

Private equity interest in social housing contractors Keepmoat and Apollo has cooled despite Lloyds Banking Group effectively putting its stakes in both up for sale.

The reticence follows a surge of interest after the Lloyds TSB takeover of HBOS in January, sparked by the relative strength of the social housing sector in the recession.

It is understood that companies including Bridgepoint, 3i, Warburg Pincus and Cognetas ran the rule over the two but have realised that mounting a bid would be too expensive.

One private equity source said: 鈥淭here is a growing recognition that any deal will be difficult because HBOS overpaid for the assets at the top of the market. Agreeing a price will be hard because LBG doesn鈥檛 want to take a big hit.鈥�

In addition to taking equity stakes of about 20%, HBOS used high levels of debt to pay 拢783m for Keepmoat and 拢410m for Apollo in August 2007. Both are being assessed for sale, along with assets in 60 other firms.

LBG is understood to be working on the assumption that the value of its assets has fallen by half since the credit crunch began, but some think the price will need to fall further to tempt buyers.

黑洞社区 understands the bank recently rebuffed one approach for Apollo of about 拢90m from a small private equity group, saying an acceptable price would be nearer 拢200m.

Another source said there was 鈥渕assive caution鈥� among buyers because of the uncertainty over the government鈥檚 public sector spending commitments and the price pressure being put on companies on frameworks.

An LBG spokesperson refused to comment on the level of interest in either company; Keepmoat said it was 鈥渂usiness as usual鈥� despite the sale speculation and pointed out that 80% of its equity is owned by the board.

Apollo was unavailable for comment.