(More Bank) – Allianz SE is exploring the possibility of a combination of its asset management business with DWS Group of Deutsche Bank AG to create a national champion of active money management, according to people close to the record .
Munich insurer investigates the feasibility of an agreement with Germany's largest lender to create a € 1.17 trillion (€ 1.33 trillion) managed business, said the population that has requested anonymity. Allianz's deliberations are at an early stage and may not lead to formal talks or an agreement, the people said. DWS is one of the jewels of Deutsche Bank and the lender is reluctant to sell its stake in the listed unit, said one of the officials.
Nevertheless, such a transaction could help Deutsche Bank finance a merger with Commerzbank AG. The lender is expected to incur approximately € 8 billion of restructuring and revaluation costs for certain assets if it decides to join its rival, said Christian Koch, an analyst at DZ Bank. DWS has a market capitalization of 5.6 billion euros, valuing Deutsche Bank's stake at 78.3% at around 4.3 billion euros.
Deutsche Bank has already called on its shareholders for around 30 billion euros over the last decade, making the sale of an asset like DWS potentially more acceptable. Representatives of Deutsche Bank, Allianz and DWS declined to comment.
Any sale of DWS could also be of interest to other companies seeking to strengthen their asset management business, including Amundi SA, the largest asset manager in Europe, UBS Group AG and Morgan Stanley. Amundi, majority owned by Crédit Agricole SA, would review DWS when it became available, according to people informed about it. A representative from Amundi declined to comment.
Deutsche Bank may sell its DWS shares at a minimum of EUR 32 per share to avoid any write-down of the value on the lender's balance sheet, according to people familiar with the information. The stock closed on Friday at 27.95 euros.
A combination of DWS, which represents 662 billion euros, and the German fund manager Allianz Global Investors, with 505 billion euros, would create a German champion of asset management.
"If Deutsche Bank were to acquire Commerzbank, it would seek financing, and one of the options is to sell its stake in DWS," said Neil Smith, an analyst at Bankhaus Lampe.
For asset managers looking for scale – and there are many nowadays – a sale of DWS would be a rare opportunity for a large transaction. The company offers one of the largest exchange-traded fund offerings in Europe, as well as a large real estate sector.
– With the help of Sonali Basak.
To contact the reporters on this story: Steven Arons in Frankfurt at sarons@More Bank.net, Jan-Henrik Förster in Zurich at jforster20@More Bank.net, Harry Wilson in London at hwilson57@More Bank.net, Dinesh Nair in London at dnair5 @ More Bank.net
To contact the editors in charge of this story: Aaron Kirchfeld at akirchfeld@More Bank.net, Dale Crofts at dcrofts@More Bank.net, Chad Thomas
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