Modular housing specialist ilke Homes has raised £60m in a new fundraising round, putting the company on course to become a top ten housebuilder within the next five years by delivering 10,000 factory-built homes.

The £60m raise is split between £30m debt from government agency Homes England and £30m of equity from multiple new investors. 

The Guinness Partnership, one of the UK’s largest providers of affordable housing and a customer of ilke Homes, is one of the new equity investors. The housing association has signed two deals with ilke Homes in the last year, for sites that will deliver 250 factory-built homes.

Tech-focused family office Middleton Enterprises and private equity firm Sun Capital have also taken equity stakes. TDR Capital has also injected further equity.

The £30m of debt comes via a facility from Homes England’s Home Building Fund. The government’s housing agency invested an initial £30m into ilke Homes back in 2019, which marked the first time the agency had ever directly invested to boost an offsite manufacturer’s production capacity, with the latest round demonstrating that ministers remain prepared to take genuinely innovative steps to intervene in the housing crisis by creating meaningful supply-side incentives to increase house building capacity.

The announcement comes at a time when the government is championing offsite manufacturing - where homes are manufactured along production lines in a factory - as a solution to ramping up the delivery of high-quality, energy-efficient housing across the UK to tackle climate change and acute housing shortages.

Stephen Robertson, founding partner at TDR Capital, said: “Precision-engineering housing will be a critical solution to greening cities and with housing needs continuing to significantly outstrip supply, we are also confident that this sector is immensely scalable. We believe there is huge potential for multiple other investors to work with us on spearheading this positive change.”

Harry Swales, chief investment officer at Homes England, said: “Manufacturers like ilke Homes are vital if developers are to build new sustainable homes at the pace and scale the country needs. This debt facility from the Home Building Fund shows our commitment in increasing productivity and efficiency in construction to meet government’s housing delivery ambitions.”

Stephen Stone, a board member of ilke Homes who floated FTSE 250 housebuilder Crest Nicholson in 2013 while CEO, said: “This announcement proves that there is a shared ambition among the public and private sectors to find innovative solutions to structural issues that have dogged the construction and housebuilding industries for decades. This new funding will help us create hundreds more highly-skilled, green jobs for an economy that is gearing up for a Green Industrial Revolution.

“The fact that our own clients continue to either invest or increase their stakes in the company is testament to the dynamic approach ilke Homes has taken to house building in the last three years. Faced with regulatory pressures and a requirement to meet ESG criteria, we are finding that investors are increasingly scaling up their MMC strategies.”

ilke Homes’ latest fundraising round follows a year of rapid growth, which has seen the company grown its order book to over £200m, signed a deal with FTSE 100 firm Boots UK to deliver over 600 homes in Nottingham, and appointed Crest Nicholson’s former chief executive, Patrick Bergin, as chief financial officer.

Catriona Simons, group chief executive at The Guinness Partnership, said: “Our investment in like Homes demonstrates our continued commitment to delivering high-quality, energy-efficient homes as quickly as possible, to those who need them most. Having partnered with the company on two sites already, we have seen first-hand the benefits ilke Homes’ method of delivery affords – which will help ensure we can continue to play an important and active role to address the housing crisis.”

Mark Farmer, a government adviser who has previously warned that the construction sector must “modernise or die” said: “True zero-carbon homes just cannot be delivered at scale through using traditional construction methods and our constrained skills base, we therefore need to move quickly to less resource intensive and higher performing pre-manufactured solutions. However, alongside government support, the private sector increasingly needs to recognise the investment case for change and that is why this announcement as a truly joint public and private financing package for a key market disruptor is so welcome.”

David Alprovich, chief operating officer at Middleton Enterprises, said: “Throughout our portfolio, we focus on companies that are disrupting traditional industries, have a competitive edge thanks to technology and make a positive impact on society. Thanks to its innovative, forward-thinking approach to housebuilding, ilke Homes fits all our criteria by deploying precision-engineering techniques that ultimately result in better quality, energy-efficient homes, less waste and reduced construction programmes.”