Council facing questions over sale of NEC New owners sell group for £500m more than it paid authority three years ago
THE NEC Group has been sold for £800 million just three years after Birmingham City Council sold it for £307 million.
The authority sold the NEC Group, including the NEC and ICC, to the private equity arm of Lloyds Banking Group in 2015.
Now Blackstone, the world’s largest property developer, is to buy the businesses for almost £500 million more.
Birmingham City Council said the business had grown since it was sold, increasing its value and the contribution it makes to the regional economy.
However, MPs fear the council failed to get a good price for the business, leaving local taxpayers shortchanged.
Labour MP Khalid Mahmood (Perry Barr) said: “I never supported the sale in the first place.
“Somebody now is going to make a huge amount of money from this.
“It’s a callous stewardship of the resources that the local authority had, but which don’t belong to poli- ticians. They city.”
Conservative MP Andrew Mitchell (Sutton Coldfield) said: “On the face of it, this would appear to have been a very bad deal for long-suffering Birmingham residents.
“I hope that Birmingham City Council will give a full explanation for the apparent, significant discrepancy in pricing.”
Conservative councillors demanded an inquiry into the original sale.
Councillor Robert Alden, Leader of the Birmingham Conservative Group, said: “When the Labour-run council decided to sell one of our city’s crown jewels in 2014 we made the point that we did not feel like they were getting good value for money for local taxpayers.
“Especially when you considered the opportunities that came with it, including the building of HS2, the development of Resorts World at the NEC site and the Big City Plan for investment and improvement near to the ICC site in the city centre, all of which were belong to the whole known about at the time and have contributed to the inflated profit Lloyds have now made. “The reported value of the sale was around £300 million but in fact the money the council received was considerably less, and then you have to factor in the significant loss in revenue since the sale. “Whilst Lloyds Group are clearly entitled to get the best deal for their shareholders, you have to question whether this enormous profit means the city council did not do its job in getting the best deal for Birmingham tax payers.” A Birmingham City Council spokesperson said: “In 2015, Birmingham City Council made it clear that if the NEC Group was to continue to develop and flourish, this could only be done outside of the council’s control because of the limitations that public ownership placed upon the business. “The growth and success the NEC Group has enjoyed over the last three years, and the enhanced contribution it makes to the regional Founded in 1976, the NEC Group has grown into one of the UK’s largest live events businesses and regularly hosts household names such as The Cycle Show, Grand Designs Live and Crufts.
Its concert arenas have played host to global artists such as Britney Spears and Ed Sheeran and live sports including the World Indoor Athletics championships earlier this year.
Seven million people attend 750 events every year at its venues and its other businesses include catering arm Amadeus and ticketing agency The Ticket Factory.
The group recently expanded its offering by opening the new Bears Grylls Adventure attraction next to the Genting Arena and the Legoland Discovery Centre at Arena Birmingham.
The NEC is also due to host nine sports when the 2022 Commonwealth Games comes to Birmingham. economy, clearly demonstrate why the sale was necessary. The developments and investments made by the new owners since 2015 mean any future owner would be acquiring a very different business and a direct comparison between respective valuations is not appropriate.
“The cost of any subsequent acquisition is ultimately a matter for any new owner based on their own valuation of the business in its current state and its future prospects.”
The council was forced to sell the NEC Group to help pay off huge debts but it remained owner of the land with the NEC site under a 125year lease and a 25-year lease on the city centre Barclaycard Arena and ICC sites.
Since taking the group private, LDC has enhanced facilities and customer experience as well as broadening the range of events.
NEC Group chief executive Paul Thandi said: “Blackstone’s track record in scaling companies, sector knowledge and unrivalled real estate capabilities, make them the ideal new partner for NEC Group to realise the next phase of our ambitious growth strategy.”