Legal & General sells UK housebuilder CALA Group in a 1.8 billion pounds deal.

London-listed insurer Legal & General Group Plc (LGEN.L) said on Thursday it had agreed to sell UK housebuilder CALA Group to funds managed by Lone Star Funds for 1.8 billion pounds ($2.4 billion).

The sale is part of the insurer's strategy to focus on its core businesses of insurance, savings, and investments. Legal & General acquired CALA in 2013 for 553 million pounds.

CALA, founded in 1875, is one of the UK's leading housebuilders, with operations across Scotland, England, and Wales. The company has a land bank of around 26,000 plots and a forward order book of over 1.2 billion pounds.

Legal & General said the sale would result in a profit of around 700 million pounds for the group. The transaction is expected to close in the first half of 2023, subject to regulatory approvals.

The sale is a significant development in the UK housing market, which has been hit by a slowdown in recent months due to rising interest rates and the cost-of-living crisis.

It is also a sign of the growing interest from private equity firms in the UK housing market. Lone Star is one of the world's largest private equity firms, with over $30 billion of assets under management.

The sale of CALA is expected to give Legal & General more financial flexibility to invest in its core businesses.

The insurer has been expanding its retirement and investment businesses in recent years, and it recently announced plans to acquire the UK wealth manager, Quilter.

The sale of CALA is a major step in the insurer's strategy to focus on its core businesses.