LONDON – Saudi Arabia’s Public Investment Fund (PIF) and Singapore’s GIC are among the investors listed as holders of riskier equity-like instruments issued by Signa’s luxury real estate unit, now caught up in insolvency proceedings in Austria.

PIF owns €287 million (S$417.6 million) of the profit participation securities, known as genussrechte or genussscheine, while the Singapore sovereign wealth fund owns €85 million, according to the insolvency filing from Signa Prime Selection, dated Dec 28, seen by Bloomberg News.

Profit participation rights are subordinated securities that grant holders a share of the issuer’s profits. Bloomberg News previously reported that PIF had exposure to the ailing Austrian real estate group’s junior debt.

Representatives of PIF and GIC declined to comment. A spokesperson for Signa did not respond to a request for comment.

How much these investors will be able to recoup from these investments during the insolvency process remains unclear.

The two main property units of Austrian retail and real estate entrepreneur Rene Benko’s Signa group, Signa Prime and Signa Development Selection, filed for court-supervised self-administration proceedings in December.

Signa Prime and Signa Development are looking to raise €350 million in total via new profit participation securities as part of their insolvency plan, according to filings seen by Bloomberg News.

Unlike the existing profit participation rights, the new funding would not be part of the claims treated under Signa’s restructuring arrangement, but would rather help fund it.

Close ties

The insolvency filings highlight how Mr Benko was able to tap deep-pocketed and far-flung investors through a variety of financing.

Take for example Signa’s Bahnhofplatz 7 project in Munich, which was to renovate the Hermann Tietz department store and construct the new Corbinian office building. Signa Prime guaranteed €117 million of financing from PIF to the firm that ran the development, according to the insolvency filing. Corporate filings show how PIF bought €187 million of profit participation certificates linked to that project, guaranteed by Signa Prime, back in March 2022.

PIF is not the only Middle East investor listed. The insolvency filing also shows €93 million in guaranteed financing from Sign Holdings RSC, a special purpose vehicle registered in Abu Dhabi.

AC, a prominent Dubai investment fund, is shown as linked to the vehicle in the insolvency filing. About a third of funding went to the five-star Bauer Hotel in Venice. A spokesperson for AC did not immediately respond to requests for comment.

The insolvency filing also discloses a €200 million corporate loan granted by a company with directors from Germany’s Schoeller Group, founded by the industrial family of that name. The financing was granted to Signa Prime Capital Invest, a subsidiary of Signa Prime Selection, according to the filing.

Signa Prime’s and Signa Development’s insolvency filings did not give a comprehensive breakdown of total exposure, meaning that specific creditors could have larger holdings than indicated.

New funds

Whether existing investors will be tempted to plough fresh cash into the business to protect their positions is still an open question. If secured, the fresh financing will allow the Signa units to remain in an insolvency proceeding known as self-administration, where management remains in place.

Signa Prime is seeking at least €300 million, while Signa Development is seeking €50 million, according to the insolvency filings.

Signa Development is offering to issue profit participation certificates at an interest rate of 9 per cent, as stated in a separate document seen by Bloomberg. The unit is looking to issue them as soon as January, and they will mature in December 2025, although it may have extension options.

On top of paying out interest, 33 per cent of the liquidity surplus at the end of 2024 will also be allocated to the holders of these instruments. There is a maximum cap, though, set at 70 per cent of the profit participation rights’ nominal amount. The instruments come with no collateral, according to the document.

In an interview on Jan 5 with German business newspaper Handelsblatt, Austrian construction magnate Hans Peter Haselsteiner – who is a shareholder in Signa Holding and Development – said he can “picture” signing participation rights to provide new cash and support the firm’s insolvency proceedings. BLOOMBERG