Modular housing start-up Ilke has secured £ 60million in funding, including £ 30million from Homes England, as it attempts to scale the business to produce more than 1,000 homes per year in over the next 18 months.
The funding, secured over the past two months, was revealed in delayed accounts for Ilke Homes Holdings Ltd, which also show the company fell to a pre-tax loss of £ 34.6million for the year going until March 2020, on earnings of just £ 12.7m. This compares to a loss of £ 22.3million for 2019.
The company’s newly appointed chief financial officer, Patrick Bergin (pictured), said the fundraiser was aimed at raising the cash needed to invest in the growth of the company.
The May fundraiser saw Ilke secure a £ 30million loan from Homes England, as well as a further £ 30million equity infusion from Ilke’s main backer , TDR Capital, alongside a range of other investors.
Further, the accounts make it clear that another investor, an anonymous private investor, paid £ 1million for a 0.5% stake in the company – valuing Ilke at £ 200million.
Bergin said: “Recent participants in the fundraiser used a valuation of £ 200million, given our £ 200million backlog and our investment in growth.”
Accounts show the company built just 146 homes in the year through March 2020, with turnover quintupled to £ 12.7million from £ 2.6million in his 2019 figures. Bergin said the year completed more recently to March 2021 will show little growth on this, due to the impact of the covid crisis, but the year Ongoing is expected to see this jump to more than 500 completions, with the company aiming to produce thousands of homes a year “within a year or two.”
The accounts said the company ceased production for a three-month period during last year’s spring lockdown “to mitigate the impact of customers also temporarily ceasing operations,” as the pandemic globally postponed the execution of the plan of “up to 18 months”.
In addition, the company’s balance sheet – which records a date prior to subsequent equity investments by TDR and other investors – shows a deficit of £ 4.3million in shareholders’ funds. However, a going concern statement in the accounts clearly indicates that TDR Capital is committed to providing all necessary financial support for the pursuit of its activities.
Bergin said the firm’s £ 200million valuation achieved during the investment cycle showed funding was secured to enable growth, rather than solving problems caused by covid delays. He said: “The funding cycle is a sign of positivity. If anything, we would have needed this funding sooner if there had been no covid, because we would have grown up sooner.
“The point is, rapid growth requires funding, and the £ 200million valuation even against those accounts shows confidence in what we’re doing. It’s like Ocado – people got used to the fact that for years it was making losses but had a high valuation, because of the potential.
“Financing is a package that allows a very fast growing company to take advantage of the opportunities available to it.
Bergin said the business would operate profitably with 12 to 18 months.
>> Briefing: How Ilke plans to produce more than 5,000 homes per year
Ilke, which was established in 2017 and produces fully-volumetric homes from its factory in Knaresbrough, Yorkshire, has the ambition to be one of the UK’s top 10 home suppliers by volume, this which would force it to produce more than 3,000 houses per year. .
Homes England’s £ 30million loan comes on top of the £ 30million already provided to the business by Homes England at the end of 2019. A Homes England spokesperson said the funding was part of Homes England to “disrupt the housing market, support new entrants and stimulate innovation”.
The spokesperson said: ‘We recently provided Ilke Homes with an additional £ 30million loan, bringing their credit facility to £ 60million. We are delighted to support Ilke’s MMC supply and backlog and will continue to support new entrants as they strive to diversify the market.