Patron Capital, the UK-based private equity firm which owns Generator Hostels, has completed a minority sale of the business to Invesco in exchange for up to €60 mln of growth capital.

Patron Capital, the UK-based private equity firm which owns Generator Hostels, has completed a minority sale of the business to Invesco in exchange for up to €60 mln of growth capital.

Invesco, which is taking up to 23% of the business, is making the investment through its second opportunistic strategy, focussed on real estate-related investments in both the US and Europe and co-managed by Invesco Real Estate, WL Ross & Co, and Invesco Fixed Income.

The capital will be used to increase the number of Generator properties across the globe. The chain currently has 5,200 beds in eight properties 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 US.

'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, the hostel chain has been expanding globally and the €60 mln of proceeds will enable it to accelerate its growth plans further both in Europe and the US.

'We see Invesco as a key partner in Generator’s ambitious growth plans,' said Keith Breslauer, managing director of Patron Capital. 'Through the combined expertise between Invesco Real Estate and WL Ross & Co, particularly in the current US market, we will be able to continue to identify distressed assets to convert into successfully operating hostels - a proven ingredient in the Generator model.'

Generator currently has operations across six European countries in Dublin, London, Copenhagen, Berlin, Hamburg, Venice and Barcelona.