By Jonathan Matsey
April 15, 2005

Warburg Pincus has invested $50 million to launch a homebuilding company dedicated to first-time buyers in Texas.

The company, Wall Homes, was founded by Steve Wall, president and chief executive, and is based in Arlington, Texas.

Warburg Pincus invested from Fund VIII and has taken a majority stake in the homebuilder, said Reuben Leibowitz, managing director at Warburg Pincus.

Leibowitz said that the funding will help to launch the company, which currently consists of a handful of senior managers, and get it established in three or four markets in Texas. He said he expects the company to start building its first homes within six months.

Several of Wall Homes' officials, including Wall himself and Chief Financial Officer Darris McClure, came from another Texas homebuilder, Choice Homes, and were familiar to Leibowitz, who has led several investments in the construction space. "I got a call in early February that Steve had left Choice and was looking for backing," Leibowitz said.

Even though Wall Homes was little more than an idea, Leibowitz said he decided to take up Wall's offer. "Steve's specialty is building low-price homes that are attractive," he said.

Wall Homes will aim for mid-sized developments, he said, building 10 to 20 houses at a time. These homes will be geared to first- or second-time homebuyers.

Leibowitz has been involved in other Warburg Pincus homebuilder deals, including a 1986 investment in M.J. Brock Corp., which was sold to Ryland Homes later that year, and in a 1991 investment in Pacific Greystone Corp., which was acquired by Lennar Corp. in 1997.

Although the company is planning to grow organically, Leibowitz said that Wall Homes may make some acquisitions in the next few years. If necessary, he said that the firm may put more money into the company to fund a significant add-on.