Setting up a growth fund and delivery vehicle for housing and regeneration investment

The Assignment

Bexley Council were looking for approaches to securing housing and regeneration growth within the Borough. They wanted to take a strategic approach, avoiding piecemeal projects, whilst diversifying the housing and employment offer and regenerating some of the most challenging areas in the Borough.

The Role

Our role was to support the Council to develop approaches to deliver their Growth Strategy with a particular focus on establishing the best way to fund and deliver the objectives. A key part was to help the Council understand their attitude to risk and reward to ensure that the right delivery solutions were considered.

We developed a toolkit to enable the Council to determine the best approach for each opportunity and recommended setting up a Revolving Investment Fund to provide financing for the Strategy. We also provided advice on how to manage the fund including strong internal governance and risk management arrangements.

Following this work, we were asked to develop and business case for the creation of a wholly owned company (BexleyCo) to develop, invest in and manage housing assets. As part of this business case, we developed an interactive financial model to provide detailed 10-year financial business plan, together with significant scenario and sensitivity analysis based on seven sites owned by the Council.

Key Outcomes

The Bexley Growth Fund was set up to fund the investment in housing and regeneration. It is an internally managed fund that is capitalised from a range of internal and external sources. By pooling investments, it allows the Council to spread their risk across a range of assets.

Using the Fund, our advice and toolkit, the Council then set up a 100% owned housing vehicle called BexleyCo, to buy and develop residential units from the market for rental. This approach also helps address Temporary Accommodation pressures, meet housing needs within the borough and generate financial returns to recycle investments.

£ 136m

Investment

425

Homes

7.5%

Return on investment predicted