Homes England has agreed to extend a £15m debt facility to TopHat, which makes houses in a factory.
When Ilke Homes went bust earlier his year, Homes England was one its biggest creditors, having lent it £30m in 2019 and another £30m in 2021. It never got its (our) money back.
Ilke Homes was a private equity-owned start-up that the government wanted to see succeed because it believes prefabricated housing could help improve the supply of cheap housing.
TopHat, a similarly speculative start-up venture that is years away from making a profit (its losses last year were double its sales), is backed by Goldman Sachs
Its £15m loan from the government comes seven months after it raised £70m from new and existing investors, with Persimmon and Aviva Capital Partners joining the shareholder roster with £25m each.
TopHat needs more money to support the development of a new factory in Corby, which is scheduled to start production sometime in 2024 with capacity for 4,000 units a year. Its current factory in Dove Valley Park, in Foston near Derby, has capacity to produce 800 homes a year.
Whether TopHat’s chances of success have improved since Ilke and Legal & General left the market is a moot point. Legal & General, which did not benefit from state aid, shut its house factory Sherburn in Elmet back in May this year.
TopHat chief executive Jordan Rosenhaus, who founded the business in 2016, said: “The investment TopHat has received from Homes England alongside others, including Goldman Sachs, Persimmon and Aviva Capital Partners, reflects the continuing recognition that it is simply not possible to build enough new homes, including affordable homes, without a strong volumetric modular sector. Following some recent, well-publicised challenges, which will always be faced by pioneering, innovative sectors, I am especially pleased that our investors have all recognised the critical importance of expanding the capacity of the sector.”
The debt facility is funded via Homes England’s Levelling Up Home Building Fund. Peter Denton, chief executive of Homes England, commented “This funding will support TopHat to manufacture more than four times the number of new homes it currently can each year. Not only will this significantly increase the delivery capacity of the MMC sector as a whole in the UK, it will also create 1,000 jobs. It is vital we continue to support innovations that promote a diverse, efficient homebuilding sector. This is about a long-term commitment to driving forward the creation of quality, thriving places for people to live and work.”
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