PIF buys Signa shares, Julius Baer gets money back

Now the exploitation of René Benko’s department store holdings is happening in quick succession: just a few days after the announcement of the Globus sale to the Thai Central Group, the British Selfridges Group has also found new owners.

Like Globus, Selfridges was owned by a joint venture between Signa and Central. The two partners bought the British department store group at the end of 2021 for around 4 billion pounds.

Unlike Globus and the KaDeWe Group, Central does not become the sole owner of Selfridges. The Thais remain with their existing majority of 60 percent. The Saudi sovereign wealth fund Public Investment Fund (PIF) will take over the Signa Group’s share. This creates a new 60:40 percent partnership between Central and the PIF. Central announced this on Monday evening.

The PIF had already been invested in Selfridges, albeit to a much smaller extent. Due to financial difficulties and behind the backs of his Thai partners, René Benko passed on part of the Signa share to Saudi shortly after the purchase, both in the operating company and in the real estate.

When Benko’s Signa Group became insolvent, the Saudis were at the table from the start in the negotiations over the bankruptcy estate. The Thais couldn’t have bought them out against their will.

Perhaps the Central Group was also happy about this constellation. It is not clear whether the Thais would have wanted or been able to completely take over Selfridge’s large financial chunk after they had already had to step in for their former partner Signa in Switzerland and Germany. In any case, Central calls the PIF the “preferred partner” in Wednesday’s announcement. With the new ownership, it is clear that Central is strategically in the lead. The PIF will primarily provide financial support.

Real estate is also part of the deal

Unlike Globus, the transaction at Selfridges not only affects the operational business, but also the properties. The British group only owns two properties, but they are very valuable: one on London’s Oxford Street and one in Manchester. Benko and the Thais paid around £2 billion for this almost three years ago.

Now there is practically no money flowing into the properties. According to the latest report from the restructuring manager of Signa Prime, the PIF will pay a cash purchase price of 1 million pounds, or around 1.2 million euros, to buy the Signa share. In return, a claim from the mortgage lender Bangkok Bank Limited amounting to around 733 million euros will no longer be included in the insolvency estate. In addition, the PIF reduced its own claims against Signa Prime from 103 to 51.5 million euros.

It is not known how much the PIF pays for Selfridges’ operations.

Money back for Julius Baer?

The sale of Selfridges marks the end of the Signa Group’s luxury department store business. The Thais recently took over 100 percent of Globus Magazine AG. They acquired the KaDeWe department store group in Germany, which, in addition to the KaDeWe in Berlin, also includes the Alsterhaus in Hamburg and the Oberpollinger in Munich, in June because there was separate insolvency proceedings there.

It will soon become clear what the outcome of the Signa collapse will be for the creditors of the group’s luxury retail business. In contrast to real estate, the situation here is relatively clear: the most important creditor by far is Bank Julius Baer. According to insiders, she had loaned 200 million francs to the Swiss-based Signa European Invest Holding, which owns the holdings in Globus, KaDeWe and Selfridges. This corresponds to a third of the loan communicated by the bank to the Signa Group, which amounted to 606 million francs.

It is not yet possible to say exactly how much of the 200 million will flow back to the bank. For one thing, it is not known how much the PIF is paying to take over Selfridges’ department store business; There were no numbers at Globus either. On the other hand, Julius Baer is the most important creditor, but not the only one.

Renovation process not yet completed

In addition, the sale of Selfridges and Globus has not yet been formally completed when the contract is signed. This is not a normal company sale, but rather a sale as part of a restructuring process under official supervision.

The two trustees Daniel Hunkeler and Georg Wohl, who were involved in the negotiations for Globus and Selfridges, speak of a “good result for all creditors given the circumstances” and are therefore behind the agreement.

But it still needs confirmation from the Zurich district court. The company then proposes a debt restructuring agreement to its creditors, as they will have to write off part of their claims. It will take months before such a contract (which also requires court approval) is concluded.

Insiders assume that Julius Baer could get almost 100 million francs back. The amount is likely to come primarily from the sale of the Selfridges Group, which successfully operates 18 stores in three countries. At Globus, however, hardly any money was likely to have flowed.

The bank will be able to report the 100 million as extraordinary profit. This is because, to be on the safe side, it has already written off the entire Signa loans of 606 million in the 2023 annual financial statements.