Deutsche Börse is in talks with potential investors – possibly including sovereign wealth funds – over the sale of a stake in Clearstream, its profitable securities settlement and custody unit, two sources familiar with the talks said on Friday.
The disposal of a stake would unlock value for shareholders at a time of sagging exchange share prices.
It comes four months after the exchange agreed a new group holding structure that separated Clearstream from Deutsche Börse.
The stake under consideration by Clearstream would be “double digit”, one of the two sources said, adding that the talks were at “a very early stage”.
Clearstream accounts for about 35 per cent of Deutsche Börse revenues and 30 per cent of its earnings.
Mamoun Tazi, an analyst at MF Global, said he valued Clearstream at €4bn-€6bn ($6.3bn-$9.4bn).
“If you are a shareholder and you are looking at maximising your value that’s one way to do it,” he said.
Deutsche Börse’s two largest shareholders are Atticus Capital and TCI, with 11 per cent and 10.5 per cent respectively.
The move would allow the exchange to develop strategic partnerships in regions – such as Asia – where it is relatively weak.
Bruce Hamilton, analyst at Morgan Stanley, said in a note this week that Deutsche Börse was the bank’s top pick of the European exchanges because of its strength in derivatives, the opportunities presented by a shift into the over-the-counter business and “around potential stake sales in Clearstream.
“While management is committed to retaining a controlling stake, we think it could be open to the idea of a minority stake sale if this could further the strategic growth ambitions of the group (eg: in Asia, which now accounts for about 20 per cent of revenues),” he wrote.
Clearstream had €10bn in assets under custody as of June.
The development also comes as there is an increasing focus on streamlining the structure of the provision of post-trade services in Europe.
Last week, the European Central Bank said it would press ahead with a plan to set up a pan-European settlement system to reduce securities post-trading costs.
That is part of broader moves to streamline clearing – in a Brussels initiative aimed at encouraging clearers to “interoperate” with each other to spur competition and lower transaction costs – and the Mifid rules liberalising trading of securities.