Deutsche Bank (DE:DBKGn) Aktiengesellschaft (NYSE:DB) recently announced plans to offer shares of its asset management business — DWS Group — at a price range of €30 to €36 per share. The shares are due to begin trading on the Frankfurt Stock Exchange on Mar 23.
Deutsche Bank plans to sell 20% of its wholly owned shares in DWS. Further, it reserves the right to offer another 5% in case of strong demand and to cover over-allotments.
The Japan-based Nippon Life Insurance Co. has agreed to become a "cornerstone" investor in the offering and would be acquiring 5% stake in the unit at the issue price. Also, a representative of Nippon Life would become member of the supervisory board of DWS. Moreover, they have entered into a five-year strategic partnership, under which additional assets under management (AUM) will be added under the DWS name.
The minority initial public offering (IPO) is expected to raise proceeds between €1.5 billion and €1.8 billion, which is lower thanwhat Deutsche Bank had hoped for.
Deutsche Bank is global coordinator on the IPO, with Barclays plc (NYSE:CS) , Morgan Stanley (NYSE:MS) , Credit Suisse (NYSE:CS) , BNP Paribas (PA:BNPP), ING, Citigroup (NYSE:C), UBS Group and UniCredit as bookrunners.
Last week, at an event in Texas, CEO John Cryan announced that the bank’s top executives would have to forgo bonus this year. On the other hand, overall employee bonuses for 2017 would be considerably higher compared with the prior year.
With about €700 billion in AUM, listing of DWS might help Cryan to turnaround the bank’s fate. Also, it is likely to bolster the bank’s capital position. Nevertheless, Deutsche Bank’s bottom line continues to remain under pressure due to low interest rates and persistent legal hassles.
Shares of Deutsche Bank have lost 17.8% over the past year, underperforming the industry’s rally of 13.3%.
The stock carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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