Insurance and asset management giant Legal & General (L&G) has agreed to sell its housebuilding subsidiary Cala back to its former owner in a £1.35 billion deal.

Investment firms Sixth Street Partners and Patron Capital have formed a joint venture to buy Cala, which is among the UK’s 10 biggest housebuilders.

Patron Capital formerly part-owned Cala, holding a 46.5% stake in the company alongside L&G. However, it offloaded its stake to L&G in 2018.

Founded in 1875 as the City of Aberdeen Land Association, Cala focuses on the premium end of the market, building homes in the south of England, the Cotswolds and Scotland.

It employs more than 1,300 people across 10 offices, and sold just under 3,000 homes last year.

The deal will see L&G get £1.16 billion, with the rest coming from the buyers acquiring Cala’s net debt.

L&G said it could use some of the proceeds to return cash to shareholders via share buybacks.

Antonio Simoes, chief executive of L&G, said the deal is part of “simplifying our portfolio”.

“Cala has been an important part of L&G for over a decade, with profits increasing ten-fold since our initial investment in 2013.”

Kevin Whitaker, chief executive officer of Cala, added that the deal showed “confidence in Cala’s business plan and growth potential, as our talented team continues to build high quality, sustainable new homes throughout the UK”.

He added that the company had tripled the number of homes it builds each year under L&G’s ownership.

Keith Breslauer, managing director of Patron Capital, said: “Cala is one of the UK’s leading housebuilders with a best-in-class landbank and a focus on building high-quality homes, being consistently ranked five-star for customer service.

He added that he hoped the company would help “tackle the under-supply of homes in the UK” under Patron’s part-ownership.