Deutsche Bank intends to proceed with the planned partial flotation of DWS, it confirmed today.
The listing would happen “in the earliest available window, subject to market conditions”, the bank said in a statement.
It did not specify a size or date for the listing but IPE understands that the transaction is being lined up for mid-March. The bank is planning to float a minority stake via a sale of 25% of its existing shares for about €1.5bn-€2bn.
Deutsche Asset Management, as the asset management arm is still officially called pending the final rebranding as DWS, has €700bn of assets under management. It was ranked just inside the top 20 in IPE’s 2017 Top 400 global managers and the eighth largest European institutional manager.
The listed asset manager will take the form of a KGaA legal structure. This is a German form of master limited partnership that will allow Deutsche Bank to exercise control over the entity even if its eventual stake were to fall below 75%.
Nicolas Moreau, chief executive officer of DWS, said: “The planned IPO will give us the opportunity to unlock the full potential of DWS for clients and employees, while targeting attractive returns for our shareholders.”
Deutsche identified several benefits of listing its asset manager.
It would enhance the external profile of DWS through greater visibility and brand recognition. It would also allow the asset manager to set a new compensation framework “that better aligns remuneration to the needs and performance of the asset management business and that will provide DWS with increased capacity to attract and retain talent”.
The world’s largest pension fund, Japan’s Government Pension Investment Fund, has become increasingly vocal about asset managers’ compensation schemes, arguing that these need to be aligned with a focus on increasing long-term returns.
Deutsche also said the minority initial public offering of DWS would provide the company with greater operational flexibility to control costs and enable it to capture future growth opportunities and select “bolt-on” acquisitions.
Medium targets for the asset manager include net inflows of 3-5% per annum of assets under management as at the start of each financial year, and a management fee margin greater than or equal to 30 basis points.
DWS plans to distribute 65-75% of its reported net income as dividend, it said.
Its supervisory board is to comprise 12 members. Expected are five independent members, four employee representatives and three Deutsche Bank representatives.
As previously announced, Karl von Rohr, chief administrative officer of Deutsche Bank, will become chairman of the DWS supervisory board.
Deutsche Asset Management’s established RREEF real estate and Xtrackers passive brands will be retained.
The rebranding as DWS is expected to be finalised in late March.
See the next edition of IPE magazine for ‘Strategically Speaking’ with Roelfien Kuijpers, Deutsche Asset Management’s head of responsible investment and strategic relationships