The auction of Deutsche Bank Asset Management has apparently hit some roadblocks.
The Financial Times is reporting that State Street has withdrawn from the bidding for Deutsche Bank AM. Bloomberg reportedly earlier this week that JP Morgan pulled out.
Ameriprise is also balking at the price and could be next out, the FT says.
What does this mean? It’s more likely that Deutsche Bank will likely have to break up the business to get any sale done, the story says. The auction has been going on since November when Deutsche Bank announced it was reviewing its global asset management business. The review excludes DWS’ franchise in Germany, Europe and Asia. However, the sale does include DWS Americas as well as RREEF Alternatives, DB Advisors and Deutsche Insurance Asset Management.
The deadline for bids is this week, Bloomberg said. Bidders included Guggenheim Partners, Power Corp. of Canada, Macquarie Group and Apax Partners, according to the story.
I’m hearing that there are only two bidders left in the running for all of Deutsche Bank AM: Guggenheim Partners and Macquarie Group. There are also still bidders for pieces of Deutsche Bank AM, sources say. Power Corp., which invests in financial services, could also still be involved, one PE exec says.
In November, Deutsche Bank’s asset management had €515.63 billion (US$697.16 billion) in assets under management. Deutsche Bank reportedly wants to sell off the unit as a whole and is seeking $2 billion. But the FT says the unit will likely fetch about $1.2 billion.
Some doubt whether Guggenheim has the funds to buy all of Deutsche Bank. Guggenheim in January sold Toronto-based Claymore Investments, the ETF provider, to BlackRock in January. It was unclear how much Claymore fetched.
“Guggenheim couldn’t afford Deutsche Bank Asset Management if they had ever nickel to buy it,” an industry source says. The most natural buyer of DB AM would be a “mega buyer of scale” like Western Asset Management Co., the person says.
Guggenheim, which manages more than $125 billion of assets, would need outside help to buy DB AM, a banking source says. This would likely be a private equity firm, the banker says. “Deutsche Bank could trade on terms of revenue 3 to 4 times,” the source says.
However, two sources say Guggenheim is fundraising. One person says this is for a CLO. Another banker says that Guggenheim “can come up with the money,”
Officials for Deutsche Bank couldn’t be reached for comment. Guggenheim declined comment.