Global investment firm H.I.G. Realty is investing €10 mln in German real estate project developer The Grounds by acquiring a bond, as part of a three-part funding plan.
The investment will help The Grounds to finance its ongoing development projects and to expand its business.
A further option is an equity investment by H.I.G. Capital via a capital increase of between €40 mln and €75 mln, to be proposed to the company's annual general meeting.
The current main shareholders, who hold 73% of the company's shares, have agreed to transfer their subscription rights to H.I.G. and to support the capital increase.
If H.I.G. exercises its option, the proceeds from the issue of subscription rights will be used for the further growth of The Grounds.
The third part of the plan is to extend the term of The Grounds' 2021/2024 convertible bond, subject to modified terms and conditions, which requires approval from the bondholders.
Jacopo Mingazzini, CEO of The Grounds, said: ‘The collaboration with an equity-rich and experienced strategic investment partner like H.I.G. Capital opens up new perspectives for The Grounds, especially in the currently challenging market environment. This is true both for the development of ongoing projects and for the company’s further expansion. So, we very much look forward to the collaboration.’
Riccardo Dalollio, head of H.I.G. Realty Europe, commented: ‘We are convinced that Germany’s residential property market is at a turning point and that it offers plenty of investment opportunities. It is a pleasure to be working with The Grounds and its strong management team to realise appreciation opportunities through investments that focus on Berlin’s housing market.’
H.I.G. was advised on the transaction by Sidley Austin and Victoria Partners, while Heuking Kühn Lüer Wojtek provided legal counsel to The Grounds.
