Tue, Feb 27, 2018 - Page 10 News List

Deutsche Bank to launch unit IPO

Bloomberg

Deutsche Bank AG yesterday formally announced its intention to sell shares in its asset management unit, kicking off a what is usually a four-week run-up to the initial public offering (IPO).

The IPO will take place “in the earliest available window,” the bank said in a statement.

It would only sell existing shares held indirectly by Deutsche Bank and does not plan to issue new ones.

“We are convinced that the planned IPO will act as a catalyst to support our strategy and deliver shareholder value,” unit CEO Nicolas Moreau said in the statement.

Deutsche Bank chief executive John Cryan in November last year said that he aims to complete the offering by the end of the first quarter, but a recent spike in market volatility stoked broader stoked concerns that IPOs and other investment banking activities might get delayed.

Some regulators, particularly in the US, had been slower than expected in granting regulatory approvals, a person familiar with the matter said.

A successful IPO would mark an important achievement for Cryan, who proposed the IPO in March last year to help bolster capital.

It would also give the business more independence after years in which Deutsche Bank failed to enact a lasting strategy for asset management. It tried to sell much of the unit in 2012, then stopped when it could not get enough money.

The unit, named DWS, is targeting net inflows of 3 to 5 percent of assets a year, an adjusted cost-to-income ratio of less than 65 percent, and plans to pay out between 65 and 75 percent of net income in dividend.

Although the formal announcement of an IPO intention does not impose any legal requirements, it typically ushers in a two-week period during which a company holds talks with potential investors to settle on a price range for its shares.

In the following two weeks, the company usually takes orders from investors in what is called the book building.

Deutsche Bank expects to sell a 25 percent stake in the unit for about 2 billion euros (US$2.47 billion), people familiar with the matter said previously.

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