Modular builder says there is a ‘clear appetite’ for a deal to save 1,000-person firm

Modular housebuilder Ilke Homes is in discussions with 15 interested investors and is confident of achieving a sale of all or part of the business to enable its continuing operation.

A spokesperson for the business confirmed that the light gauge steel frame frame modular builder was in discussions with 15 separate potential investors to secure the future of the business, indicating “clear appetite” to finalise a deal.

The discussions come after Ilke paused production at its 250,000 sq ft Knaresborough factory last Thursday and put the business up for sale amid concerns about a looming cash crunch.

ilke Homes factory

Ilke’s factory in Knaresborough

The spokesperson was today not able to confirm speculation in other publications that volume housebuilders Barratt, Bellway and Taylor Wimpey are among those looking to invest in the firm.

However, an industry source said that linking of Barratt to the Ilke sale was not correct. He said: “I don’t think Barratt is interested in the slightest and isn’t talking to Ilke.”

A separate source said likewise that reports that Ilke, which has 1,000 staff and is set to reveal a turnover of above £100m for its last financial year, was being offered for sale for as little as a pound were “simply untrue”.

This cash crunch and sale at Ilke is a separate development further to that reported by Housing Today early last week, which was then causing it to delay publication of its accounts. Housing Today understands that work was paused at Ilke’s factory only after existing investors late last week said they had become concerned at the rate of cash burn at the firm.

Ilke is currently owned by private equity firm TDR Capital, with other stakes held by Sun Capital, housing associations Guinness and Places for People and Fortress Investment Group. Without a new investor its £1bn order book of mainly affordable homes will not be delivered, amounting to around 4,200 units.

The troubles at Ilke follow the closure of L&G Modular earlier this year, and the collapse of the Urban Splash Sekisui modular venture last year. It’s difficulties come despite the firm securing a £100m fundraising as recently as December.

The confirmation of the investor interest in the Ilke business came as Labour MP Fabian Hamilton, who represents the Leeds North East seat in which Ilke’s factory resides, yesterday raised the firm’s difficulties at prime minister’s questions in the House of Commons.

>> See also L&G Modular’s closure shows there’s a limit to the patience of slow capital

>> See also What does the closure of L&G’s flagship factory mean for the future of modular in the UK?

Hamilton said Ilke was “facing the prospect of collapse” and used the firm’s difficulties as an example to press Rishi Sunak on whether it was right to water down nationally-set housing targets.

Ilke is understood to have struggled to have developed a sizable enough pipeline of its own developments in order to sustain its business, in part because of the current slow planning environment, and earlier this week said its growth had been “complicated by uncertainty over planning policy”.

Rishi Sunak responded to Hamilton’s question by saying: “It wouldn’t be right for me to comment on the circumstances of any individual company, but what I can say is I make absolutely no apology for respecting what local communities want in their local areas, while the party opposite may want to ride roughshod over local communities and impose top-down housing targets.”

Ilke said on Monday that its operating business had delivered “strong contribution margins”, but that “Ilke Homes now requires new investment to meet overheads, achieve further scale and become cash flow positive.”