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Deutsche Bank kicks off asset management unit's public offering

[FRANKFURT] Deutsche Bank AG on Monday formally announced its intention to sell shares in its asset management unit, kicking off a what is usually a four-week run-up to the initial public offering.

The IPO will take place "in the earliest available window," the bank said in a statement. It will only sell existing shares held indirectly by Deutsche Bank and doesn't plan to issue new ones.

"We are convinced that the planned IPO will act as a catalyst to support our strategy and deliver shareholder value," Nicolas Moreau, the unit's chief executive officer, said in the statement.

Deutsche Bank CEO John Cryan said in November that he aims to complete the offering by the end of the first quarter, but a recent spike in market volatility stoked broader concerns that IPOs and other investment banking activities may get delayed. Some regulators, particularly in the US, had been slower than expected in granting regulatory approvals, according to a person familiar with the matter.

A successful IPO would mark an important achievement for Mr Cryan, who proposed the IPO in March last year to help bolster capital. It would also give the business more independence after years in which Deutsche Bank failed to enact a lasting strategy for asset management. It tried to sell much of the unit in 2012, then stopped when it couldn't get enough money.

The unit, named DWS, is targeting net inflows of 3 per cent to 5 per cent of assets a year, an adjusted cost-to-income ratio of less than 65 per cent, and plans to pay out between 65 per cent and 75 per cent of net income in dividend.

Although the formal announcement of an IPO intention does not impose any legal requirements, it typically ushers in a two-week period in which a company holds talks with potential investors to settle on a price range for its shares. In the following two weeks, the company usually takes orders from investors in what is called the book building.

Deutsche Bank expects to sell a 25 per cent stake in the unit for about 2 billion euros (S$3.24 billion), people familiar with the matter said previously.