Wealth Funds Looking for Glamour in Benko's Luxury Estates

(Bloomberg) -- 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 plans, according to people familiar with the situation.

Benko, the 41-year-old founder and principal shareholder of Signa Holding GmbH, 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. They 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.

Wealth Funds Looking for Glamour in Benko's Luxury Estates

Benko has expanded the retail arm of his group with the acquisition of furniture chain Kika/Leiner in Austria and, in Germany, Hudson’s Bay Co.’s 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 Chief Executive Officer 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.

Trophy Assets

Norway’s $1 trillion wealth fund and Mubadala are looking at an investment in Signa Prime Selection AG, 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.

Mubadala doubled in size after a tie-up with another local fund and is using its new scale to compete for global deals. It’s completed 31 deals since the start of 2017, according to the Sovereign Wealth Fund Institute.

Wealth Funds Looking for Glamour in Benko's Luxury Estates

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 outlets. 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 SE’s Hans Peter Haselsteiner, and insurers R+V Versicherung AG 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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