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Invesco takes 23% stake in Patron’s cool hostel brand

Patron Capital, owner of Generator Hostels, has completed a minority sale of Generator to Invesco Ltd. of up to 23% in exchange for €60 million (US$75 million) of growth capital.

Invesco’s stake in Generator is the inaugural investment by Invesco’s opportunistic strategy, focused on growth businesses, co-managed by Invesco Real Estate, WL Ross & Co. and Invesco Fixed Income. The capital will be used to exponentially increase the number of Generator properties across the globe.

The Generator chain currently has 5,200 beds in seven cities across Europe, a number that will near 7,000 by 2015 after three confirmed openings in Paris, Rome and Amsterdam. The group expects to grow the portfolio to 20 properties by 2018, including a number of European cities and at least three cities in the United States.

The Lounge at Generator London
The Lounge at Generator London

“This transaction, via a global institutional capital partner, is a major proof of concept for hostels as an asset class,” said Josh Wyatt, senior advisor at Patron Capital responsible for the Generator brand and chief strategic officer at Generator. “Since Patron acquired Generator in 2007, Generator has built a powerful global brand and revolutionized 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 U.S., where we believe there is significant potential.”

Through its opportunistic strategy Invesco is now extending its commitment to the hospitality industry beyond the traditional lease model, according to Erik Jacobs, director, hotel fund management transactions, Invesco Real Estate. “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,” Jacobs said. “As an organization, we look forward to assisting Patron with Generator’s ongoing growth by utilizing Invesco’s extensive global network.”

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