Sigma raising cash to build 10,000 homes for rent in next five years
SIGMA Capital Group is raising £20 million through a share placing and intends to develop its own ‘substantial’ portfolio of rented homes across England.
The Edinburgh company said it is initially targeting eight sites across Greater Manchester and Liverpool.
AIM-listed Sigma, founded as a technology player but now working in regeneration and major housing developments, is already involved in a number of schemes in those areas in partnership with other organisations.
Chief executive Graham Barnet hailed the fundraising plan as a major development for the business. He said: “It will enable us to build our own substantial private rented sector portfolio, capitalising on the infrastructure and relationships we have spent the last three years putting in place for large scale PRS.
“There is an urgent need for new housing in the UK and we look forward to developing our own PRS assets as well as continuing to deliver new rental homes under our partnership model.”
Construction of its own assets is expected to begin early next year with Sigma suggesting the range of family homes will provide net annual income of more than £2m. At the end of the development phase Sigma plans to recycle its capital to fund further schemes.
Mr Barnet said: “The development of our own portfolio will significantly enhance returns and generate additional long-term recurring income.”
Chairman David Sigsworth said: “This is intended to complement our existing partnership model and marks another significant step in the development of the business.”
The new shares have been conditionally placed with institutional investors at a price of 75p per share. The placing still needs to receive shareholder approval with a general meeting being held on September 2.
Sigma also issued a halfyear trading update which showed pre -tax losses widened from £200,000 to £400,000. Revenue in the period to June 30 was £1m, down from £1.8m. Sigma stated it only started to generate revenue from rental activities in the final quarter.
The company has extended its par tnership with Gatehouse Bank to deliver 10,000 homes for rental over the next five years, up from 6,600. It has signed an exclusivity agreement for Sheffield Housing Company and expects work on its first project with Grainger to start in Greater Manchester in the second half of this year.
Mr Sigsworth said: “Over the next 24 months or so, our goal is to deliver PRS sites throughout the major cities in England outside London, in the North, Midlands and the Home Counties, giving us national coverage.”