CHINA Evergrande Group, China’s second-largest property developer, is in “early stage” talks to buy Cala Homes, a person familiar with the upmarket British housebuilder said.

    Edinburgh, Scotland-based Cala Homes, which is owned by insurer Legal & General and real estate managers Patron Capital, was being advised on the offer by investment bank Lazard, its long-term advisor, the source said.

    Sky News, which first reported on the approach, said Evergrande’s offer could be worth close to 700 million pounds (US$858.84 million).

    Cala, which builds large, high-end homes across affluent areas of Britain in the Midlands and Scotland, reported revenue of 587.1 million pounds for the year ended June 30, 15 percent higher than a year earlier. Net bank debt stood at 123.9 million pounds at end-June.

    The approach comes as recent mortgage data and statements from housebuilders have indicated that the UK housing market is recovering somewhat from a sharp downturn in activity that followed Britain’s vote to leave the European Union.

    The Brexit-induced pound slide has fuelled foreign demand to invest in the sector, especially from Chinese buyers keen to diversify away from a slowing home market.

    China Vanke confirmed in September that it had bought a London office property.

    For Guangzhou-based Evergrande, one of the most indebted companies in the industry, the purchase of Cala would mean access to the U.K. housing market as developers benefit from a chronic supply shortage. Britain launched a 5 billion-pound homebuilding stimulus package last month.

    Evergrande has been aggressively investing in other companies as it looks to lift some of the pressure of having amassed some US$57 billion in debt, almost six times its market value, on land acquisitions and corporate mergers.

    (SD-Agencies)