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* Buys 97.7 million pound stake in CALA Group
* First direct investment, has 36.5 bln pounds to invest
* Keen to invest in infrastructure, housing
By Brenda Goh
LONDON, March 18 (Reuters) - Insurer Legal & General said it was looking for more chances to invest directlyin infrastructure, with about 36.5 billion pounds ($55.23billion) ready to invest, after it took a stake in CALA Group.
L&G, which said on Mar. 6 that a shortage of bank lendingwas driving a need for increased direct finance, bought the 46.5percent stake in the UK housebuilder from Lloyds Banking Group on Monday alongside private equity group Patron CapitalPartners, which also purchased a 46.5 percent share.
The remaining 7 percent was bought by the management of the138-year-old company. The deal, which values the housebuilder at210 million pounds, will be financed by 140 million pounds ofequity and 70 million pounds of debt.
Rather than locking up their cash in funds managed by buyoutfirms, big pension funds and insurers are increasingly teamingup with private equity to buy stakes in companies directly,reducing the fees buyout firms charge for managing their money,and gaining more control.
Life insurers such as L&G, which have long-term financialobligations to their pensioner customers, are keen to put moremoney into property and infrastructure projects which generatepredictable cash returns over many years.
L&G said its push for more direct investments was due to thegreater control this offered, and it wanted to cut similar dealsin education, housing, transport and energy infrastructure.
"We've talked about five areas we're looking to in terms ofour growth themes and one of these is direct investment ... Thiswas the first one that came into that filter of opportunity,"said Wadham Downing, L&G's group strategy director.
"We have 6.5 billion pounds of shareholder funds at group,as well as our annuity funds, which is about 30 billion pounds,and we'll be using both of those vehicles to invest ininfrastructure," he said, adding that it could be through equityinvestments or loans.
CALA, which builds homes in England's Cotswolds region andaround Glasgow and Edinburgh in Scotland, was the first Scottishcompany to list on the London Stock Exchange in 1875.
Hit hard by the financial crisis, it returned to profit in2010. It posted pre-tax profit of 11.4 million pounds and hadgross assets of 354 million pounds for the year to end-June.
L&G said its 65 million pound equity investment would befinanced from its own resources. It is expected to boostearnings for L&G in its first year and to deliver a return abovethe group's weighted average cost of capital.
The investment comes after a year of robust profits atBritish housebuilders such as Persimmon and TaylorWimpey, which have beaten sluggish demand in the housingmarket with the help of government support and a strategy ofbuying land cheaply during the recession.
