After failing four years ago to sell its asset-management unit to private equity, Deutsche Bank may finally unload a chunk of the business.
The German bank is considering selling a minority stake in the unit through an initial public offering, according to the Financial Times. An IPO of part of the business is unlikely before the first half of 2017, the story said.
Deutsche Bank is considering several options, including an IPO of the unit, as it “scrambles” to agree to a settlement with U.S. authorities, the FT said.
On Sept. 15, the German bank said it had begun negotiations with the U.S. Department of Justice to settle a probe tied to mortgage-backed securities. The DOJ was seeking $14 billion and invited Deutsche Bank to submit a counter proposal, DB said in a statement.
Later that month, Bloomberg said Deutsche Bank was near a $5.4 billion resolution with the DoJ, while Der Platow Brief, a German markets publication, said Oct. 4 that the settlement was in the $4 billion to $5 billion range.
John Cryan, Deutsche Bank’s CEO, was expected to meet with the DoJ in Washington on Oct. 7, the FT reported.
Some think the need for capital will spur Deutsche Bank to offer up some of its asset-management unit. “Yes, they will sell,” one GP told Buyouts. “They need the capital after the Justice Department’s $14 billion fine.”
Deutsche Bank Asset Management has 719 billion euros ($803.2 billion) in assets under management. The unit is worth about 8 billion euros ($8.9 billion), the FT said.
This won’t be the first time DB has tried to sell the business. In 2012, Deutsche Bank had been in talks to sell RREEF, its global alternative asset management business, to Guggenheim Partners, Buyouts reported at the time.
Those talks fell apart when the parties were unable to agree on terms, Deutsche Bank said. DB wanted $2 billion for the unit while press reports said it would likely fetch about $1.2 billion.
Rumors of an asset-management sale have been circulating recently. In a Sept. 12 letter to employees, Cryan denied the bank was considering a sale.
“There is one rumor in particular that I would like to dispel by making it unambiguously clear that Deutsche Asset Management is and will remain an essential part of our business model,” Cryan said in the letter.
A Deutsche Bank spokeswoman declined comment and referred questions to Cryan’s Sept. 12 statement.
Action Item: Contact Deutsche Bank: +1 212-250-2500.
Deutsche Bank CEO John Cryan addresses the bank’s annual meeting in Frankfurt, Germany, on May 19, 2016. Photo courtesy Reuters/Kai Pfaffenbach