The house search at the holding company of billionaire René Benko has not gone unnoticed on the capital market. Bonds issued by Signa Development Selection fell to their lowest level in history on Wednesday after Austrian prosecutors raided the holding company’s offices on Tuesday over corruption allegations. The bond with an issue volume of 300 million euros and maturity in 2026 fell by almost 3 cents on Tuesday to 55.7 cents per euro nominal value. It was listed at a discount of more than 40 percent to the issue price, as can be seen from trading data Bloomberg news agency emerges.
It was initially unclear why investors are separating from the papers. Above all, however, reputation concerns are likely to be behind it, also because the debt instruments were marketed as “sustainable”. The Signa Group had borrowed money on the capital market last year, from insurance companies and large investment funds, not with the Signa Prime Selection, which includes the department store KaDeWe in Berlin, but with the Signa Development Selection (SDS), which one of the largest real estate developers in Europe. Signa did not respond to an inquiry about this at the time this issue went to press.
The Vienna Economic and Corruption Prosecutor’s Office had the offices of the parent company on Tuesday Searched Signa Holding. Prosecutors confirmed that they searched the premises of two companies as part of investigations into bribery and illegal party financing, without naming them. The raid on Signa is the result of a more comprehensive investigation into Thomas Schmid, the former head of the Austrian state holding company Öbag and former director general of the Ministry of Finance. Schmid is a central figure in the investigation that began in 2019 and has continued to expand. The starting point was a video filmed in Ibiza by the then right-wing Vice Chancellor Heinz-Christian Strache, in which he announced government orders for party donations. As a result, Schmid’s cell phone was confiscated with hundreds of thousands of text messages, which in turn triggered further investigations.
In Germany, Signa Holding is trying again to obtain state aid for the ailing German department store group Galeria. It was only in January that the federal government supported the company with a further 220 million euros. The department store giant was formed in 2019 from the merger of Karstadt and Kaufhof.