Bayside set to start up debut Euro opportunities vehicle

Fellow US private equity firm TPG is also capital raising for Europe fund

Bayside Capital plans to launch its first dedicated real estate opportunities fund for Europe in the next three or four months. The $500m-plus vehicle will target real estate bricks-and-mortar assets, loan portfolios and direct lending across the industrial, residential, office and hotel sectors.

The move reflects a trend among US-owned private equity firms and hedge funds to move into European real estate and then launch funds. TPG Capital has started fund raising for a property vehicle, called TPGRE II, targeting $2bn. TPG began investing in real estate deals in 2009, later packaging these assets in a vehicle it called TPGRE I.

Bayside’s London-based managing director Ahmed Hamdani said: “Over the past year we’ve seen the pace at which we can deploy capital and the types of returns we can generate.” He joined Bayside 18 months ago to run the asset-backed distress business, including real estate, real estate debt, structured credit and other hard assets such as shipping.

Real estate is the H.I.G. Capital-owned group’s fastest growing area of business and it has already spent its one-third portion of the $1bn equity raised from big US pension funds in April 2013 for Bayside’s European distressed fund. The same amount of equity is allocated to corporate distress and ‘rescue’ financing for borrowers that need outside capital to deleverage.

In the interim, Bayside has access to $500m of capital from the group’s global fund, plus an additional $200m-$300m of equity. One of its latest deals is the purchase of the 378-bed Hilton hotel in London Docklands, which requires redevelopment and repositioning. It is best known for striking the first portfolio deal with Spanish bad bank Sareb, through its purchase of the €100m Project Bull residential property portfolio last summer. The firm hired Tuna Atay from Brookland Partners in September to focus on assets stuck in securitised vehicles.