Allianz Explores Deal with Deutsche Bank’s Asset Management Arm: Sources

By Steven Arons, , Harry Wilson and | March 18, 2019

Allianz SE is exploring the possibility of a combination of its asset management arm with Deutsche Bank AG’s DWS Group to create a national champion in active money management, according to people familiar with the matter.

The Munich-based insurer is looking at the feasibility of a deal with Germany’s largest lender to create a business with 1.17 trillion euros ($1.33 trillion) under management, said the people, who asked not to be identified discussing the private matter. Allianz’s deliberations are at an early stage and may not lead to any formal talks or agreement, the people said. DWS is one of Deutsche Bank’s crown jewels and the lender is reluctant to sell its holding in the stock-listed unit, one of the people said.

Still, such a transaction could help Deutsche Bank finance a merger with Commerzbank AG. The lender would have to come up with about 8 billion euros for restructuring expenses and revaluation of certain assets should it decide to combine with its cross-town rival, according to Christian Koch, a DZ Bank analyst. DWS has a market cap of 5.6 billion euros, valuing Deutsche Bank’s 78 percent stake at about 4.3 billion euros.

DWS shares rose as much as 9.3 percent in Frankfurt — the most on record — on the Allianz interest in early trading on Monday.

Deutsche Bank has already tapped shareholders for about 30 billion euros this decade, making the sale of an asset like DWS potentially more palatable. Representatives for Deutsche Bank, Allianz and DWS declined to comment.

Any sale of DWS could also attract interest from other firms looking to bolster their asset management business, including Amundi SA, Europe’s largest asset manager, UBS Group AG and Morgan Stanley. Amundi, majority owned by Credit Agricole SA, would take a look at DWS if it became available, according to people briefed on the matter. An Amundi representative declined to comment.

Deutsche Bank may need to sell its DWS stock for at least 32 euros per share to avoid a writedown on the value booked 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 oversees 662 billion euros, and German active money manager Allianz Global Investors, with 505 billion euros, would create a German champion in asset management.

“If Deutsche Bank were to acquire Commerzbank, they’ll look at how to finance it, and one of the options is to dispose of their stake in DWS,” said Neil Smith, an analyst at Bankhaus Lampe.

For asset managers seeking scale — and there are a lot these days — a sale of DWS would present a rare opportunity for a large deal. The firm has one of Europe’s biggest offerings of exchange traded funds, as well as a sizable real estate business.

Deutsche Bank tried to sell much of the asset management business in 2012, but stopped when it couldn’t get the price it wanted. It raised about $2 billion last year when it sold a minority stake in an initial public offering of the firm.

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