Global asset manager Federated Hermes has purchased a stake in the flagship European real estate debt fund of newly-independent investment manager Penny Blue Capital.

The global investment manager has acquired ESR’s interest in the fund, following Penny Blue’s recent separation from ESR Europe to launch as an independent specialist private credit manager focused on asset-backed investments across Europe.

Details of the investment made by Federated Hermes have not been disclosed.

Since its inception in 2013, when Penny Blue was founded within Venn Partners before becoming part of ESR Group in 2020, it has originated more than €5bn (£4.3bn) of loans across Europe.

Federated Hermes’s private credit business manages more than $2bn (£1.5bn) of assets.

The firm launched its real estate debt business in 2015 with the aim to deliver stable, uncorrelated, “through-the-cycle” returns from sustainable real estate assets.

Read more: Federated Hermes appoints head of European credit opps

“We are excited to have completed our first European real estate debt secondaries transaction with the purchase of an LP stake in the Penny Blue flagship fund,” Vincent Nobel, head of European real estate debt at Federated Hermes, said. “Our investment was driven by the quality of the portfolio in the fund, which we believe reflects disciplined underwriting, strong asset selection and attractive exposure to the sector.”

“We have just come through one of the most significant real estate repricing cycles in recent history, which by many measures has been comparable to the impact of the Global Financial Crisis on European real estate values,” added Paul House, Penny Blue Capital’s chief investment officer. “Against that backdrop, we are delighted to welcome Federated Hermes – a sophisticated and highly respected institutional investor – to our investor base. Their decision reflects confidence in our loan selection, borrower relationships and disciplined underwriting standards.”

Beatrice Dupont, chief executive of Penny Blue Capital, called the investment from Federated Hermes “a significant endorsement” of the platform, its investment approach and team.

Read more: Federated Hermes taps Australia’s wholesale market with trade finance fund