Australian group Pepper Asset Servicing, which last year bought GE Capital’s Irish sub-prime mortgage book, is to manage €380 million of distressed Irish property loans formerly owned by Lloyds.

Carval Investors bought the €380 million portfolio of commercial property loans from Lloyds for 25 cent in the euro – €95 million – last month.

Lloyds acquired the debt four years ago when it took over Bank of Scotland (Ireland), which lent heavily to Irish developers during the last decade’s property bubble.

Yesterday Pepper said that Carval had hired it to manage the portfolio, and confirmed that it intended to make a €3 million investment in the loan book alongside its new owner.

The Australian player will manage the loans in partnership with Arrow Asset Management, an Irish business that specialises in distressed properties – assets whose value is less than that of the loan used to buy them.

The two have formed an alliance, and the Carval portfolio is the first that they will be taking on jointly.

Carval bought the portfolio, which was known as “Project Pittsburgh”, from Lloyds in November. At the time, the British bank sold off almost €2 billion worth of loans on Irish properties whose values had slumped since the financial crash in 2008.

The sell-off included a package of over 100 properties with debts of €1.8 billion, which the Apollo Global Management-linked Risali Ltd bought for €149 million.

Pepper is Australia’s biggest independent mortgage lender. It entered the Irish market in June when it bought GE Capital Woodchester Home Loans, the Irish sub-prime mortgage business owned by the US giant.

GE said last year it lost €149 million on the Irish mortgage business. The US group wrote off €84 million on the total mortgage book between 2008 and 2010.

The sale gave Pepper ownership of €600 million worth of loans on 3,500 homes in the Republic.

Paul Doddrell, chief executive of Pepper in Ireland, described the deal as a milestone for the business and extra staff were being hired. Arrow managing director Robert Kehoe also welcomed the deal.