South East housebuilder Magna Group is launching a private capital arm that will club together private financiers to provide cash for its schemes.
Magna Private Capital was launched to investors last week. It allows entry to the residential development market at a lower price point for investors.
“We have built a business through a network of high net worth individuals, but what we have found is, as projects get larger, not every high net worth has got £5m sitting around in their bank,” said chief executive Chris Madelin.
“There are a lot of people with a few hundred grand, who would love the return from an equity play, but cannot get into a deal.”
In the arrangement, investors will join an investment club, which presents a monthly yield of 1%, while the deal is selected and then presented to investors. After this, the initial outlay will be invested in the project, where the investor will participate as an equity player.
Investors will put in at least £150,000, and then will receive shares of the project’s profit, capped at 25% IRR.
Magna Group has or is in the process of developing six sites in Hampshire and Surrey, with a GDV of around £95m. A number of them are through office-to-residential conversions. Prices for a one-bedroom apartment in Surrey start at £160,000.
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