Caltongate set to be revived by failed firm's ex-bosses

THE former owners of the Caltongate site are set to launch a dramatic bid to buy it back from administrators, in a move that could revive the controversial £300 million development.

Former Mountgrange Capital directors Manish Chande and Martin Myers have raised a fund of £300m from a range of investors, and are keen to snap up sites across the country where a developer has gone bust.

It is understood Caltongate, currently owned by Deloitte as Mountgrange Capital's administrator, is top of the fund's wish list and 'active enquiries' have already been launched by the fund about a bid for the site.

However, Mr Chande and Mr Myers are thought to be growing increasingly frustrated by the setbacks and delays they have faced in making their vision a reality.

Deloitte is not currently marketing the Old Town site because of concerns that it would not get the right value in the current market. The property tycoons may yet walk away unless Deloitte allows speedy progress on a potential deal.

If they regained control of the key Old Town site it is almost certain that the development would progress in line with the existing planning consent for a new five-star hotel and shops, offices and homes.

The Mountgrange Real Estate Opportunity Fund has raised the £300m from investors who include oil-rich sovereign wealth funds, endowment and pension funds and rich individuals. The fund, part of asset manager Mountgrange Investment Management (MIM), is entirely separate from Mountgrange Capital so is not affected by the latter being in administration.

It estimates that the money raised would enable it to borrow further funds and give it a net acquisition pot of about £850m.

One insider close to the development said: "Mountgrange are now with funds: formal funds of £850m for investment. They have made a statement of intent on Caltongate and they now have the funds to act on that."

Mountgrange Capital went into administration after Bank of Scotland withdrew funding. The bank is still owed £73.8m that it had invested in the company.

When Mountgrange's annual accounts were published earlier this year, the Caltongate land was valued at just over £20m, compared with £45m at its peak.

It is not known how much the administrator would demand for the site, which has the benefit of full planning consent. But it is understood it is looking to include the price of some of the assets the council still owns, including the Canongate Venture, in the deal.

Mr Chande, senior partner of MIM, said: "We believe there are opportunities in the UK which can provide substantial returns for our investors. Our task now is to bring these identified opportunities to fruition."

John Reid, joint administrator for Mountgrange at Deloitte, said: "We are not currently actively marketing the Caltongate site or soliciting offers at this time.

"At present, there remain certain matters to be concluded with regard to the land assembly and planning, which the administrators are progressing."

Ron Hewitt, Edinburgh Chamber of Commerce chief executive, said: "The fact that they (MIM] are able to raise more funding and want to invest it here shows the value in this."