Called EH1, the company will be run by Kenny Waugh, the former owner of Festival Group, which operated several bars and hotels in Edinburgh and online bookmakers Scotbet before it went into administration.
Waugh, who also becomes a director at G1 Group, will be responsible for operating the three Edinburgh hotels – Grassmarket, Bank and Murrayfield – and Grassmarket's bar Biddy Mulligans, which were all part of the Festival Group and later acquired by EH1 from administrators KPMG.
G1 Group managing director Stefan King said: “I’ve been keen to work with Kenny for some time and I am pleased to be able to join him in strengthening Edinburgh’s leisure market.
“No-one knows the city’s bars, hotels and clubs better than him and to have his in-depth knowledge and experience at Board level will be of enormous benefit.”
Initial plans for EH1, a subsidiary company of G1, will include a capital expenditure programme in excess of £1m in 2012.
G1, is owner of 45 venues in Scotland, including bars, restaurants, hotels and cinemas. In 2005 it created Iona Pub Partnership, the tenancy arm of its business which owns the freehold of 110 pubs across Scotland.