Tetragon Financial Group has entered into an agreement with John Carrafiell, Sonny Kalsi and Fred Schmidt to invest in their newly created multi-jurisdictional real estate venture, GreenOak Real Estate.

All three partners formerly worked together at Morgan Stanley for more than a decade, where Carrafiell (based in London) was the former global co-head of the real estate investment banking and investing business, Kalsi (based in New York) was the former global head of the real estate investing business, and Schmidt (based in Tokyo) was the former head of the real estate investing business for Asia.

Under the terms of the transaction, Tetragon will receive a ten per cent equity interest in GreenOak and will provide GreenOak with a working capital loan of up to USD10m and a USD100m co-investment commitment that is expected to fund up to a limited fixed percentage amount of any GreenOak sponsored investment programme with Tetragon retaining the option to invest further amounts.

Tetragon will also grant to the GreenOak founders options with respect to approximately three per cent of Tetragon's listed shares, exercisable after five years and subject to further conditions, at a strike price of USD5.50.

Paddy Dear, a director of Tetragon and a principal of Polygon Credit Management, the investment manager of Tetragon, says: "We think there are significant opportunities in the real estate market, including widespread distressed opportunities, and gaining further exposure to this asset class especially at attractive fee levels is very appealing. We are also particularly excited to partner with individuals with such extensive experience. We believe John, Sonny and Fred continue the TFG model of seeking to partner with exceptional asset managers."

In connection with the transaction, an affiliate of Polygon Management will provide GreenOak with a working capital loan and a limited co-investment commitment and certain Polygon affiliates will enter into an agreement with GreenOak to provide operating, infrastructure and administrative services to the business. Polygon will also provide the GreenOak founders with an equity interest in Polygon. Polygon will, in turn, receive an equity interest in GreenOak.