Birmingham & Black Country

Birmingham's NEC group sold to Lloyds Banking Group in £307m deal

Clockwise from top Barclaycard Arena, Genting Arena, ICC and the NEC Image copyright Other
Image caption The deal includes, clockwise from top left, Barclaycard Arena, Genting Arena, ICC and the NEC

Birmingham's NEC Group has been sold for £307m to LDC, the private equity arm of Lloyds Banking Group.

The group was sold to help settle Birmingham City Council's £1.1bn bill for equal pay claims.

It includes the National Exhibition Centre (NEC), International Convention Centre (ICC), the Genting Arena and the Barclaycard Arena (BA).

The council remains freeholder and LDC has a 125-year lease on the NEC and a 25-year lease on both the ICC and BA.

The authority said the agreement maximises its proceeds.

Pay settlements have been agreed with thousands of women employed by the council who, over many years, were paid less than other workers, mainly men, for doing similar jobs.

The council was allowed to borrow almost £500m, but was left with a £550m shortfall to cover the bill.

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Media captionThe venues include the National Exhibition Centre, the International Convention Centre, the Genting Arena and the Barclaycard Arena

A deal to sell the NEC group was originally expected to be completed by the end of 2014, but was put back to allow negotiations to continue.

The authority has previously described the venues as "vitally important" to the West Midlands economy, bringing in £2bn a year.

About four million people attend events at the venues every year.

The LG Arena was renamed the Genting Arena earlier this month as part of a sponsorship deal with the Malaysian-based casino and leisure group. The BA was formerly known as the NIA.

It is also developing a £150m shopping and entertainment complex adjacent to the arena site named Resorts World Birmingham.

40 years of the NEC

  • The National Exhibition Centre was the first of the four venues to open in 1976
  • It now features 20 halls on a 610-acre site near junction six of the M42 motorway
  • The complex also includes the 16,000-seat Genting Arena, which opened in 1980. It has hosted conventions and concerts by the likes of Queen, Muse, Beyonce, Elton John and George Michael
  • The £200m International Convention Centre was added to the NEX Group in 1991. Based in Centenary Square, in 1998 it hosted the G8 summit
  • The National Indoor Arena was also officially opened in 1991 and hosted the World Indoor Athletics Championships in 2003

Birmingham City Council is retaining the freehold of all the sites and the sale also protects the existing uses of all venues as well as Symphony Hall, the authority said.

It will lend the bank £15m in the form of a loan note, including the value of the leases of the Hilton Metropole and Crowne Plaza hotels on the NEC site which are being retained by the council.

Paul Thandi, from the NEC group, described the sale as "a fantastic opportunity."

"They [the buyers] have an appetite to invest in our business but also in our resources and our people," he said.

"They want to help us grow our business."

"It's a fantastic price of real estate."

Asked if there would be an impact on the size of the NEC group workforce, he said: "I am always looking at cutting costs. There will always be jobs created, there will always be jobs going."

Image caption The LG Arena was renamed the Genting Arena earlier this month

Who is LDC?

LDC is the private equity arm of Lloyds Banking Group.

It provides finance of up to £100m to support management buy-outs, equity release and development opportunities within UK companies.

It says more than 80 of its businesses are valued in excess of £2bn.

Some of the companies it has funded include Orion Media, which owns eight radio licenses in the Midlands. It was recently renamed Free Radio

Sir Albert Bore, leader of the city council, has not revealed the name or number of other bidders but he said there had been strong interest with a shortlist of three final contenders.

"We will now, through the new ownership, see considerable investment in the site over the coming years," he said.

"That has to be good for the group and the wider Birmingham area."

The council's business plan for 2014 onwards says money obtained from the sale of assets "are expected to be used to finance equal pay settlements".

But Sir Albert said the council had not decided how the money would be used and it would not necessarily go on settling the equal pay claims.

Martin Draper, LDC's chief executive officer, said: "The NEC Group is one of the UK's best known and iconic businesses, particularly so in the Midlands, where it is at the heart of the region's commercial and leisure activities."

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