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Brookfield Asset Management is nearing an almost €800mn deal to buy the European arm of hostel chain Generator Group, according to people familiar with the matter, in the private equity giant’s latest bet on the hospitality sector.
A deal would mark the biggest exit yet for Generator’s owner Queensgate Investments, a real estate-focused private equity group with £3bn under management, at a time when market turmoil and slower-than-expected interest rate cuts have weighed on mergers and acquisitions activity.
Generator’s European arm, which manages 15 hostels in European cities including London, Barcelona and Berlin, would have an enterprise value of €780mn, of which about a third was equity and the remainder was debt, two people said.
Queensgate bought Generator for €440mn in 2017. It has since grown it through a US and European expansion, increasing adjusted earnings from the European business from €20mn in 2017 to €65mn this year. Queensgate planned to retain the US arm of Generator, which runs six hostels in the country, the people added.
Brookfield, which manages about $1tn in assets, has been among a host of US private equity groups to invest heavily in the European travel sector in recent years, betting that a surge in tourism after the Covid-19 pandemic will fuel demand.
Last year, private equity-backed hotel deals in Europe totalled €17.4bn, the highest level since 2019, according to consultancy HVS. Brookfield has expanded its apartment hotel business Edyn across the continent in recent years, and in 2021 bought Spain-based hospitality group Selenta for €440mn. It also owns UK lodging group Center Parcs.
A deal was likely to be announced in the coming days provided no last-minute issues emerge, the people said. Brookfield, Queensgate and Morgan Stanley, which is advising on the sale, did not immediately respond to requests for comment.
Queensgate also owns the luxury Freehand Hotels chain and London’s Grange Hotels chain, among several hospitality and real estate investments. The fund, which was launched in 2012, is run by Jason Kow, an investor who previously worked for LJ Investment Group, a real estate-focused family office.
