CHP has raised £100m bank finance to back ambitious growth plans that pitch “a new home every day”.
The Chelmsford-based provider owns and manages 10,000 homes throughout Essex and boasts a strong ‘A’ rating from S&P and the strongest possible ratings for governance (G1) and financial viability (V1) from The Regulator of Social Housing.
CHP had two main aims in this latest fundraising process: maximising capacity for growth and increasing liquidity.
“I’m delighted to say that we have achieved both,” said Paul Edwards, deputy chief executive and chief financial officer.
Since 2017, CHP has retained Centrus as corporate finance advisor, having previously successfully advised on CHP’s retained bond sale through its Myriad Capital PLC subsidiary.
The latest success builds on already strong relationships with existing lenders, Lloyds and Barclays, and starts a new relationship with National Australia Bank (NAB).
“We’ve set up the right treasury structure to deliver our ambitious new corporate plan which focuses on building a home per day, and at the same time increased our secured revolving credit facilities to act as further risk mitigations,” said Edwards.
Following a comprehensive funding options appraisal, it was determined to raise up to £100m from the bank market as flexible liquidity to support the development programme.
Within the context of undertaking a competitive procurement exercise, CHP engaged with Lloyds and Barclays to establish if ‘win-win’ outcomes could be achieved, including unlocking additional development capacity for the future.
The outcome of this approach was a very positive response from the existing banks and from a range of prospective lenders, enabling CHP to benefit from a multitude of choices and to consequently optimise the terms and conditions, including the cost of funds.
Centrus MD Paul Stevens says CHP has achieved an “excellent” result that succeeds in enhancing existing strong banking relationships – including unlocking additional development capacity at negligible cost – while at the same time establishing a new relationship with NAB.
“[That] fits well with the overall treasury mix and enables strategically important diversification of funding,” he said.
“We were delighted to work with CHP, delivering outcomes that exceeded expectations and which leave CHP optimally placed to maximise growth opportunities.”
Claire Simpson, relationship director in Lloyds Bank Commercial Banking’s Large Corporates team, said the CHP fundraising supported the bank’s strategy of raising finance to provide services and build more affordable homes; while Andy Taylor, director, Barclays Public Sector – Social Housing, said the funding was an “obvious fit with our ongoing commitment to the social housing sector”.
To NAB, the transaction is part of a new UK social housing strategy.
“The transaction enables us to commence a relationship with CHP, and will help it continue its invaluable work in providing much needed homes in the Essex region,” said NAB director Michael Carr.
“[Our] social housing team is committed to building relationships with housing associations to help reduce the housing shortage.
“Providing finance to this sector isn’t just about assets and financial transactions – it’s about projects that make a difference to people’s lives.”