TDR Capital-backed modular housing pioneer ilke Homes has raised £60 million in a recent fundraising round, putting the company on course to become a top ten housebuilder within the next five years by delivering 10,000 factory-built homes.
The £60 million raise is split between £30 million debt from government agency Homes England and £30 million of equity from multiple new investors.
The Guinness Partnership, one of the UK’s largest providers of affordable housing and a customer of ilke Homes, is one of the new equity investors. The housing association has signed two deals with ilke Homes in the last year, for sites that will deliver 250 factory-built homes.
Tech-focused family office Middleton Enterprises and private equity firm Sun Capital have also taken equity stakes. TDR Capital has also injected further equity.
The £30 million of debt comes via a facility from Homes England’s Home Building Fund. The Government’s housing agency invested an initial £30 million into ilke Homes back in 2019, which marked the first time the agency had ever directly invested to boost an offsite manufacturer’s production capacity, with the latest round demonstrating that ministers remain prepared to take genuinely innovative steps to intervene in the housing crisis by creating meaningful supply-side incentives to increase house building capacity.
The announcement comes at a time when the Government is championing offsite manufacturing – where homes are manufactured along production lines in a factory – as a solution to ramping up the delivery of high-quality, energy-efficient housing across the UK to tackle climate change and acute housing shortages.
Harry Swales, chief investment officer at Homes England, said: “Manufacturers like ilke Homes are vital if developers are to build new sustainable homes at the pace and scale the country needs. This debt facility from the Home Building Fund shows our commitment in increasing productivity and efficiency in construction to meet government’s housing delivery ambitions.”
Stephen Robertson, founding partner at TDR Capital, said: “The defensive attributes of residential property are attracting unprecedented levels of investment globally, but without a meaningful strategy to build greener, more energy-efficient homes at scale, we have no hope of meeting climate targets. Precision-engineering housing will be a critical solution to greening cities and with housing needs continuing to significantly outstrip supply, we are also confident that this sector is immensely scalable. We believe there is huge potential for multiple other investors to work with us on spearheading this positive change.”
The new funding will be transformational for ilke Homes, allowing the company to invest heavily in automating more of its manufacturing processes to drive efficiencies, secure more sites and expand its ‘package deal’ strategy, which offers full development service of site, infrastructure and homes in a rapidly growing market. Both housing associations and build-to-rent operators are looking to scale up delivery of homes over the next few years, and ilke Homes’ potential to deliver modern homes quickly and sustainably is an attractive proposition to these companies.
By manufacturing offsite, ilke Homes is able to deliver precision-engineered homes twice as fast than traditional methods of construction, helping investors access revenue streams faster.
The monies will also be used to scale-up production and accelerate capacity to deliver up to eight homes a day, up from two today – all helping to bring down manufacturing costs in the process.
The homes delivered are also highly energy-efficient, with the company, as part of its ilke ZERO offering which was launched this year, able to deliver thousands of zero-carbon homes a year for a mix of institutional investors, private developers, housing associations and councils. The company has already delivered zero-carbon homes on five sites across the UK.
