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Thu 13 Sep 2018 11:32 AM

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Abu Dhabi's Mubadala courted to back luxury property fund

Sources say Austrian real estate investor Rene Benko is in talks with wealth funds in Norway and Abu Dhabi

Abu Dhabi's Mubadala courted to back luxury property fund
Austrian real estate investor Rene Benko.

Austrian real estate investor Rene Benko is in talks with the sovereign wealth funds of Norway and Abu Dhabi to lure fresh capital to back his expansion, according to people familiar with the situation.

Benko, the 41-year-old founder and principal shareholder of Signa Holding, met executives from Norges Bank Investment Management and Mubadala Investment Co in recent months to present the financials and strategy of his closely held companies, said the people, who asked not to be identified because the talks are private.

Officials at Signa Holding and the Norwegian wealth fund declined to comment, while Mubadala didn’t respond to a request for comment.

Benko has expanded the retail arm of his group with the acquisition of furniture chain Kika/Leiner in Austria and Hudson’s Bay Co’s German Kaufhof department stores. The Kaufhof deal, announced Tuesday, includes a property portfolio and will cost the investor 1.6 billion euros ($1.85 billion) overall.

Benko was part of an Austrian business delegation that traveled to Abu Dhabi in April to seek deals with the emirate. During a meeting with Mubadala CEO Khaldoon Khalifa Al Mubarak, Benko said Signa hoped to conclude an agreement with the wealth fund about investments in Europe. There are now “concrete” talks about such a deal, one of the people said.

Norway’s $1 trillion wealth fund and Mubadala are looking at an investment in Signa Prime Selection, Benko’s vehicle for trophy assets, the people said. That would fit well with the Norwegian fund, which has snapped up a number of properties across the world in partnership with others, including large buildings on London’s Regent Street, Times Square and Paris’s Champs Elysees.

With 23 properties worth 8.5 billion euros in total, Signa Prime Selection is best known for Berlin’s KaDeWe luxury department store and Vienna’s “Golden Quarter” of inner-city luxury stores. It will acquire Kaufhof’s most prestigious department stores in the Hudson’s Bay deal.

Benko’s Signa Prime Selection started to expand when Greek shipping billionaire George Economou became its first major investor in 2009. Economou sold out in 2015. Other big shareholders include Germany’s RAG-Stiftung, the foundation managing the nation’s exit from hard coal, Strabag’s Hans Peter Haselsteiner, and insurers R+V Versicherung and LVM, according to filings in Austria’s corporate register.

Signa Prime Selection’s pretax profit doubled to 988 million euros in 2017, boosted by a 1 billion-euro fair value adjustment, according to its annual report. The unlisted company completed a 500 million-euro capital increase last month, which valued it at 3.3 billion euros, according to the filings.

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