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Asset management roundup: Nippon Life to back DWS’s listing

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Nippon Life Insurance Company is to hold a 5% stake in DWS once the asset manager is listed, Deutsche Bank said today.

DWS and Nippon Life have also agreed a strategic partnership, which will include a contribution of assets under management to DWS, opportunities for distribution, and joint product development for an initial period of five years.

A representative of the Japanese insurer will also be a member of DWS’s supervisory board.

Nicolas Moreau, member of the management board of Deutsche Bank and CEO of DWS, said: “Our strategic alliance is consistent with, and will help accelerate, our focus on growing in the Asia region.”

The plans were announced in a statement about the terms of listing DWS, which Deutsche Bank last month confirmed it would proceed with. DWS is the new brand for the asset manager, to be rolled out after the IPO.

The bank today said it would sell 20% of DWS shares, with the possibility of increasing this to up to 25% in the event of particularly strong demand.

The shares are to be offered at between €30 to €36 per share. Based on that price range, DWS’s market capitalisation would be between €6bn to €7.2bn.

Commission ‘disappoints’ with CMU plans for investment funds 

European Commission (EC) plans to amend private equity and venture capital laws could make it harder for private equity fund managers to raise cross-border capital from EU investors, according to trade body Invest Europe.

It said the Commission had proposed amendments that would prevent fund managers from sharing draft marketing materials with investors, which would impede their ability to negotiate a deal.

“The Commission’s latest proposal goes against its good intentions for a Capital Markets Union that improves cross-border capital flows,” said Michael Collins, CEO of Invest Europe.

The Commission today presented a package of proposals aimed at completing the Capital Markets Union (CMU) project. The sustainable finance action plan it presented on Thursday also came under the heading of the CMU, along with fintech proposals also revealed last week.

Today the Commission presented three sets of proposals, one of which was for rules designed to eliminate barriers to the cross-border distribution of investment funds in the EU. 

Some of these rules were intended to facilitate pre-marketing activities by asset managers but Invest Europe was concerned the proposed wording could have the opposite effect.

In seeking to come up with harmonised definition of pre-marketing for different types of funds, the Commission had not taken due account of the way in which private equity operated compared with other alternative funds or retail funds, Invest Europe said. 

Draft marketing materials were “an important part of the ongoing dialogue between fund managers and investors, including pension funds and insurers”, said Invest Europe’s CEO. 

The EC said easier cross-border distribution was expected to speed up growth of a single EU market for investment funds and boost competition between asset managers. Its proposal consists of a regulation and a directive, and “is designed to improve transparency, remove overly complex and burdensome requirements and harmonise diverging national rules,” it said. 

The German fund management association, BVI, said the Commission’s proposal was “disappointing” and created new obstacles rather than eliminating existing ones. BVI’s statement focused on provisions relating to the conditions a manager could de-register a fund in a given national market. 

Thomas Richter, CEO of BVI, said: “Instead of removing barriers to cross-border distribution the Commission would rather assign new powers to the European Securities and Markets Authority and scale back the powers of national supervisory authorities.”

Costing the EC sustainable finance plan

Asset managers could face increased execution risk and higher costs as a consequence of EU legislation clarifying their duties with regard to sustainability, according to Moody’s.

The rating agency was commenting on the EC’s sustainable finance action plan, which was unveiled last week.

Asset managers would need greater environmental, social and governance (ESG) expertise if they were required to incorporate ESG considerations in every investment decision they made, the credit ratings agency said.

“Finding consistent, high-quality data to guide ESG investing is a particular challenge, given a lack of universally accepted ESG definitions and standard reporting guidelines,” said Moody’s analysts.

“As sustainability is not binary by nature, and its criteria are mostly qualitative, it is complex and costly to track, analyse and report. Firms that either lack this capability, or possess it only in rudimentary form, will need to acquire it or build it up internally.”

Envisaged enhanced disclosure requirements would also entail additional costs as asset managers would need to explain how they take ESG factors into consideration and update their product offering and prospectuses accordingly. They would also need to expand internal systems to track compliance, because non-compliance could lead to fines.

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