Midlands social housing groups Keynote and Prime Focus are in talks about merging to create a single group with assets valued at almost £1bn.

Birmingham firm Prime Focus and Coventry company Keynote have agreed to evaluate the business case for a potential merger.

If the move goes ahead, the group would manage 30,000 homes and invest about £120m a year in Midlands housing schemes.

Richard Clark, group chief executive of Prime Focus, said that a merger would benefit the standard of housing in the area. He said: “The housing sector is undergoing rapid change and Keynote and Prime Focus are leading advocates of neighbourhood renewal and creating better places to live.

“The combined resources of the two groups could offer considerable impetus to achieving the government’s targets for higher standards of housing in the West Midlands.”

Tom Murtha, group chief executive of Keynote, added that the merged group could be a powerful force in housing and regeneration.