GI Partners has made a splash into the German mortgage sector by backing a Munich-based investment house.
The Menlo Park, California-based private equity and real estate firm will invest in Elystan Capital Advisors, which is hoping to buy non-performing loan books as well as mortgage-backed securities and real estate portfolios. GI is believed to be investing more than €100 million of equity, depending on the opportunities, sources familiar with the matter said.
GI, which is investing through its $1.9 billion GI Partners Fund III, has been working with Elystan since last year to buy a German bank. If their attempt is successful, it would mirror GI's 2008 investment in the start-up of New York-based debt investment shop Ladder Capital.
Elystan has offices in Germany, Austria and Switzerland, and was established by Keith Fisher, Robert Grassinger and Ulrich Kastner. Fisher previously worked at Orion Capital Managers and Lehman Brothers. Grassinger has held a number of senior roles within Württemberger Hypo and Hypo Real Estate, while Kastner has worked at numerous financial institutions including Deutsche Bank, Dresdner Kleinwort Wasserstein and Lehman Brothers.
GI and its new portfolio company said in a statement there was growing pressure on German banks to minimise their exposure to “non-core and non-performing assets”, such as mortgages.