Deutsche Bank, Germany's biggest lender, plans an initial public offering of its institutional and wholesale asset management wing, DWS, next week Reuters reported citing sources close to the matter. The German bank could list the unit on the Frankfurt stock exchange and offer around 25% of DWS's existing shares, according to the sources. The bank expects the listing to generate between around 1.5 billion and 2 billion euros. “Transaction security is more important for Deutsche Bank than price”, the news agency quoted one of the people as saying.
Another source mentioned that the the debut will take place before Holy Week, the week before the Easter holidays, when some investors are expected to be away, in order to maximise investor attention.The bank has been considering an IPO since late 2016 and in March 2017 announced that it would list a minority stake in its asset-management arm, one of the bank’s most consistently profitable units, as part of a broader overhaul following costly lawsuits and trading scandals. In December it announced that it was re-branding Deutsche Asset Management as DWS before the listing.
The unit will be floated as a partnership limited by shares, or a KGaA, a corporate structure that ensures Deutsche Bank can keep control even if its shareholding falls below the 75 percent figure needed to control most listed German corporations. That would give other investors less say over how the business is run. Other examples of banks under a KGaA structure are Metzler, Hauck & Aufhäuser and Sal. Oppenheim. Listed DAX firms which hold the structure are chemical and consumer goods firm Henkel, chemical firm Merck and pharma firm Fresenius.
According to the news report in Reuters, the IPO will help DWS attract and retain talent by awarding bonus shares to staff while enabling it to use its shares to fund acquisitions “The business is looking for ways to strengthen its so-called alternative products offerings, especially in areas such as structured credit and real estate asset management. It also want to bolster its distribution network and expand in countries such as Japan, Korea, Taiwan and Singapore” reads the report.
Earlier this month, James von Moltke, chief financial officer, said the bank wanted to execute the listing at the next possible market window and unit head Nicolas Moreau said that it is making progress preparing for the offering. “We want to unlock the full potential of Deutsche AM to facilitate growth,” Reuters quoted Moreau as saying. DWS had 3,800 staff managing €702bn of assets at the end of 2017 It is the third largest asset manager in Europe. France’s Amundi with €1.4tn raanks first, followed by UK’s Standard Life Aberdeen with £646bn (€733bn).
Deutsche Bank shares hit a two week high on Wednesday as investors reacted to the news about the IPO of its wealth management division. Germany's biggest lender has fallen 14.5% so far this year and more than 30% since it unveiled an €8 billion capital raising plan on March 2017and said it would sell around €80 billion in legacy assets from its Global Markets division and look to partially spin-off of its Deutsche Asset Management Unit (DWS) following $7.2bn fine from the US Department of Justice over mortgage mis-selling in 2016.
Christopher Thompson, Banking Columnist at Reuters, wrote on 5 December 2017 “ by sacrificing a portion of its most consistently profitable division, Deutsche Bank will dilute the already risible 4.1 percent annualised return on tangible equity it achieved in the first nine months. CEO John Cryan is aiming for a 10 percent return. Selling off its asset management arm only makes that harder.”
UPDATE 26/02/2018 11:17
Deutsche Bank confirms IPO plans for asset management unit
Deutsche Bank plans to go ahead with the listing of DWS "in the earliest available window, subject to market conditions," the lender said in a statement on Monday. The German bank didn't say how much of the unit it intends to float. The float is being led by Deutsche Bank as sole global coordinator and bookrunner. Barclays, Citigroup, Credit Suisse, BNP Paribas, ING, Morgan Stanley, UBS and UniCredit are involved as joint bookrunners. Commerzbank, Daiwa, Banca IMI, Nordea and Santander are involved as co-lead managers. Shares of Germany's biggest lender rose 1 percent to 13.42 euros by 9:50 a.m. in Frankfurt.
UPDATE 23/03/2018 14:28
DWS debuts on Frankfurt Stock Exchange
DWS began trading on the Frankurt Stock Exchange today. Germany's largest lender had priced the initial public offering of its asset management arm at €32.50 a share, translating to €1.4 billion for the 22.5% stake, slightly below the mid-point of its target range of €30 to €36 a share. according to a company statement released late Thursday.
The opening share price of 32.55 euros apiece was marginally higher than the issue price of 32.50 euros set by the bank. Japan's largest life insurer Nippon Life reportedly took 5% stake and Tikehau Capital SCA of France purchased almost 4% of the company.
"I think it is a big day for the German financial industry and especially for Frankfurt because we are the first asset manager being listed in Germany, we are the largest in Europe and we have got great ambition," Nicolas Moreau, CEO of DWS, told CNBC.
The IPO, key part of the turnround strategy announced by Deutsche Bank's chief executive John Cryan a year ago, marks one of Germany’s biggest listings this year.