Generator Hostels secures €60m growth capital from Invesco
Generator Hostels owner Patron Capital has completed a minority sale of Generator to Invesco of up to 23%, in exchange for €60m of growth capital to support global expansion.
Invesco’s stake is the inaugural investment by its opportunistic strategy focused on growth businesses, co-managed by Invesco Real Estate, WL Ross & Co, and Invesco Fixed Income. The group expects to grow the portfolio to 20 properties by 2018, with new additions in a number of European cities and at least three cities in the USA.
Erik Jacobs, Director, Hotel Fund Management Transactions of Invesco Real Estate, comments: “Through Invesco’s opportunistic strategy we are now extending our commitment to the hospitality industry beyond the traditional lease model. We are excited to be investing in the Generator platform as we see strong fundamentals supporting the hostel segment, and Generator is a market leader in terms of product, design and brand recognition. As an organisation, we look forward to assisting Patron with Generator’s on going growth by utilising Invesco’s extensive global network.”
This injection of funds by a major global institution confirms Generator as a pioneer in the new breed of accommodation that are urban design hostels and a brand with a bright global future. The chain currently has 5,200 beds in 7 cities across Europe, a number that will near 7,000 by 2015, after three confirmed openings in Paris, Rome and the recently announced Amsterdam.
Josh Wyatt, Senior Advisor at Patron Capital responsible for the Generator brand, and Chief Strategic Officer, Generator comments: “This transaction, via a global institutional capital partner, is a major proof of concept for hostels as an asset class. Since Patron acquired Generator in 2007, Generator has built a powerful global brand and revolutionised the hostel experience. The €60 million of proceeds cements our valuation premium for Generator and will enable the company to accelerate its growth plans both in Europe and the US, where we believe there is significant potential.”
Carl Michel, Generator’s Executive Chairman, adds: “Generator continues to set the pace for the hostel asset class. This transaction is another in a series of firsts for the hostel industry in that a major, global capital partner has acknowledged the strong growth opportunity for Generator and hostels as a wider institutional asset class. We intend to use this capital to expand our network to the best-in-class cities where our customers and clients expect to see our world class design, superior room product, and stylised social spaces for both locals and global explorers.”
Pictured: Generator Paris
