Deutsche Bank Values up to 7.2B Euros in DWS Unit IPO

Deutsche Bank set the price range for the planned initial public offering of its asset management unit on Sunday, valuing the division at up to 7.2 billion euros ($8.86 billion).

One of Germany’s expected biggest listings this year, Deutsche Bank plans to sell up to 25 percent of the business, or a maximum of 50 million shares at a price range of between 30 euros and 36 euros each, it said on Sunday.

That would raise proceeds of between 1.5 billion and 1.8 billion euros, less than the maximum the bank had initially expected. Going into the deal, the IPO had been expected to raise between 1.5 billion and 2 billion euros, valuing the unit at between 6 and 8 billion euros, people close to the matter have said.

A successful offering of DWS after a surge in market volatility would indicate an important achievement for Deutsche Bank Chief Executive Officer John Cryan, who proposed the sale a year ago to help boost the lender’s capital.

The unit — headed by Nicolas Moreau — will also gain more independence and flexibility for acquisitions at a time when firms are under pressure to expand in the asset-management business.

The German lender said in March 2017 it would list a stake in DWS as part of a broader overhaul to help it move on from a string of lawsuits and trading scandals. The IPO has been brought forward as the bank hopes to lock in stock market valuations ahead of any further market correction.

Attractions of DWS include its diversified portfolio across many asset classes and global scale. A return to net money outflows and failure to cut costs are major risks to the business.

The unit has also had a mixed performance across regions. While assets under management in Germany have been increasing, with a particularly strong jump in the second quarter of last year, its U.S. funds have yet to recover from the massive outflows suffered in 2016.

Deutsche Bank is expected to publish the listing prospectus on Monday.

Strategic Partnerships

DWS said it will enter into a strategic partnership with Nippon Life that will see the Deutsche Bank subsidiary manage some assets for the Japanese insurer. It will also involve joint product development and “opportunities for distribution,” according to the statement.

“Our strategic alliance is consistent with, and will help accelerate, our focus on growing in the Asia region,” Moreau said in the release.

BlackRock, sovereign wealth funds, and others have been in talks with Deutsche Bank about buying into the IPO.

Some investors have raised questions about the timing of the offering as the economic growth cycle turns and financial markets become more volatile.

Deutsche Bank is a global coordinator on the IPO, while Barclays, Citi, Credit Suisse, BNP Paribas, ING, Morgan Stanley, UBS, and UniCredit are bookrunners. Commerzbank, Daiwa, Banca IMI, Nordea, and Santander are co-lead managers.

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