Details of the listing of Deutsche Bank’s profitable asset management arm are due to be published in two weeks, with the first day of trading in DWS planned for mid-March.
Germany’s biggest lender, which wants to sell a stake of about 25 per cent in the division for about €2bn, kicked off the formal listing process on Monday by publishing its intention to float DWS.
Trading in DWS is scheduled to begin the week starting March 19, according to a person with knowledge of the matter.
With about €700bn of assets under management, DWS is a top-five European asset manager and with a market share of 26 per cent leads in Germany’s retail market.
Nicolas Moreau, the unit’s head, said on Monday he was open for “growth opportunities” after the initial public offering, in particular strengthening DWS’s footprint in alternative investment products, adding “we don’t need to engage in transformational deals, though”.
Costs at DWS will rise in 2018 and come down only in later years, Mr Moreau said.
DWS last year spent €0.70 cents on every euro of income but wants to bring this below €0.65. “This will be a three- to four-year process,” said Mr Moreau. “2018 will be a transition year as we want to invest in our business and face some additional costs due to Mifid II regulation as well as the finalisation of the separation from the bank.” From 2019, the cost-income ratio will move towards the target of less than 65 per cent.
The listing is a cornerstone in Deutsche chief executive John Cryan’s turnround strategy for the lender, which is suffering from sinking investment banking revenues and in February said it would not meet its previously announced cost-cutting target for 2018.
DWS on Monday confirmed its ambitious medium-term targets outlined in December, promising to increase AUM by 3 per cent to 5 per cent. Last year, AUM increased 2.3 per cent after a 5.5 per cent drop in 2016. DWS earned a management fee margin of 31.5 basis points, in line with its medium-term goal. “2017 was a quite successful year,” said Mr Moreau.
Deutsche Bank on Monday confirmed it will not issue new shares but sell only existing shares in DWS. The company will be listed as a partnership limited by shares or KGaA, a legal structure that gives external shareholders less control rights than in a normal stock company. For instance, Deutsche Bank will still be able to name DWS’s top management without the consent of external shareholder representatives.
“We have a good feedback from potential investors,” said Mr Moreau, adding that many global investors see DWS as a way “to play the German financial sector without having to invest in banks and insurers”.
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