Crest eyes possible £500m flotation Crest Nicholson, the housebuilder that collapsed during the credit crisis, is weighing a return to the stock market, underscoring the resurgence of investor confidence in its sector. Owned by Varde Partners, a distressed investment fund, the housebuilder is being lined up for a potential £500m flotation five years after being taken over by the banks at the height of the financial crisis. Other options are also being considered including a sale to a private buyer but an IPO, expected in January, is seen as the preferred option. Crest Nicholson declined to comment. IN Construction Analysts said the deal was indicative of the improvement in housebuilders" fortunes. Shares in the housebuilding sector are up 48 per cent in the year to date compared with 6 per cent for the FTSE as housebuilders increased margins by selling homes built on land bought cheaply during the recession. They are also benefiting from a host of government incentives to stimulate housebuilding as well as a shift towards more profitable houses rather than apartments. Like all the listed housebuilders, Crest is doing well. Its profits have recovered more quickly than the others as it wrote down land during the housing crash straight away, and it has a strong bias towards the South East" said Charlie Campbell, an analyst at Liberum Capital. It has a track record of improving profits, plus there's a raft of government measures to stimulate housebuilding so now may be a good time to float. Crest became a symbol of the banking crisis after being bought by the entrepreneur Sir Tom Hunter and HBOS for £1.2bn at the peak of the British housing market in 2007 after 35 years as a listed company. The credit squeeze meant it could not refinance its debts and the company ended up wholly owned by its banks, including HBOS, now part of Lloyds. Varde, a distressed-debt hedge fund in Minneapolis, gained control last autumn through a restructuring that fixed the company's balance sheet. The company has since revealed a £40.5m pre-tax profit for the year to October 2011 on sales that rose 12.2 per cent to £319.1m. Nevertheless, Crest Nicholson sold just half the 3,300 homes a year that it built at its peak in 2007, when it was Britain's eighth-biggest housebuilder. It needs more critical mass, and more investment to grow either organically or by acquisition. Rival housebuilders including Galliford Try, Berkeley and Barratt Developments have also reported surging profits in the past few months despite the fragile economic recovery and the reluctance of banks to offer mortgages. Redrow, which reported a 60 per cent rise in profits this week, is under offer from its founder Steve Morgan, owner of English second-tier soccer club Wolverhampton Wanderers, who has made an indicative 152p a share offer to take the company private. A decision is expected by the end of next week, but if the deal goes ahead investors could be left looking for opportunities to reinvest in the housing sector.