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M&G Investments worked with the Welsh Assembly to provide finance for an ambitious social housing initiative.
Headquarters: Caerphilly, Wales
United Welsh is a not-for-profit organisation which owns and manages over 5,000 properties, spanning 11 local authorities in South Wales.
The registered social landlord focuses on supporting individuals and families in very diverse circumstances. This includes working with other support providers to supply homes for people with additional needs including:
The organisation was just one of the 17 housing associations involved in this initiative.
M&G Investments collaborated with the Welsh Government to provide financing for an ambitious social housing initiative. This innovative scheme enabled Welsh housing associations of varying sizes to access long-term funding on attractive terms to help meet the growing demand for affordable housing.
M&G combined forces with the Welsh Government to create a pool of capital to fund the ambitious new homebuilding targets and other essential initiatives for 17 Welsh housing associations. A grant from the Welsh Government was accompanied by a £156 million 'club deal' loan from M&G.
Many housing associations were too small on their own to access the capital markets. By pooling together, they could each benefit from economies of scale (making legal and other fees more affordable) while selecting a repayment profile that suited their individual long-term plans. M&G undertook detailed credit analysis for each of the 17 housing associations and each participant received a portion of the capital pool. From the investor’s perspective, the investment provides a stream of long-term cashflows that are stable and secured against portfolios of existing homes.
One of the borrowers, Caerphilly-based housing association United Welsh, sought £30 million of financing to support its business plan which included a development programme for 500 properties.
One of United Welsh’s largest developments, the award winning ‘The Beeches’ scheme, benefited greatly from the provision of external financing. This pioneering development saw the regeneration of 82 mixed tenure homes, for both affordable rent and sale, on the historic Caerphilly Miners’ Hospital site and helped meet the housing needs for many local people.
Building on the existing relationship, M&G later provided a further £50 million to United Welsh in a separate financing package. The 33 year private placement allowed United Welsh to further expand its housing stock across South Wales by funding the construction of 600 properties over the subsequent two years.
Mark Davie, Head of Social Housing at M&G Investments, said of the deal: “We are pleased to further our relationship with United Welsh as they continue to play an integral role in the community by providing local people with much needed housing.”