GI Partners has backed the start-up of a Munich-based investment house in order to target Germany's mortgage market.
The private equity and real estate firm plans to invest roughly €100 million or more in Elystan Capital Advisors, which will buy non-performing German loan books as well as mortgage-backed securities and real estate portfolios.
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.
GI, currently deploying its $1.9 billion GI Partners Fund III, has been working with Elystan's founders since last year to buy an unnamed German bank.
Elystan 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.
The company has offices in Germany, Austria and Switzerland.
The Elystan investment is not unusual for GI. In 2008, the firm teamed with fellow private equity group TowerBrook Capital Partners to launch New York-based debt investment shop Ladder Capital, which provides financing to the commercial real estate industry. Last year, GI backed the launch of Urban & Civic, a UK land and real estate investment firm led by former Lend Lease Europe chairman Nigel Hugill and deputy chairman Robin Butler.