Troubled Octavia to join Abri as a subsidiary

The boards of Abri Group and Octavia Housing have approved plans to merge by the end of December, subject to shareholder approval and lender consents.

Under the proposal, 5,000-home Octavia will join 50,000 Abri as a wholly-owned subsidiary as part of the former’s plan to return to regulatory compliance.

Octavia is currently non-compliant with the Regulator of Social Housing’s governance and financial viability standard because of its poor financial planning and ‘unrealistic budgets’.

As part of its recovery plan agreed with RSH to improve its governance and strengthen its finances, it hired Savills to carry out a selection process for a potential merger partner and 50,000-home Abri was chosen.

Gary Orr, chief executive of Abri, has previously said the move “offers potential synergy” within Abri’s regional operating model.

In September 2023, RSH said the London-based provider had “significantly underperformed against its budget in 2022/23’ and has had to implement savings as a result, in addition to negotiating covenant wavers with lenders. RSH said Octavia “had not adequately considered the financial implications when taking on new liabilities or ensured appropriate monitoring of the risk”. 

>>See also: Abri invests ‘record’ £100m in existing homes but sees 19% dip in annual completions

It said the association’s business plans since 2020 have been built on an assumption of savings between 2020 and 2025, but progress on achieving these has been slow.

In July it was also awarded a ‘C3’ grading against the new consumer standards, meaning there are “serious failings” and significant improvement is needed.

Octavia referred itself to RSH after a serious fire at its Petworth Court block in Wembley in January. RSH subsequently found Octavia had 1,200 overdue fire safety remedial actions and held incomplete data on health and safety inspections.