Deutsche Bank has confirmed that the pending DWS initial public offering (IPO) will price the asset management business in the €30-€36 range, valuing it at €6bn-€7.2bn, and that Nippon Life Insurance Company will take a 5% stake as part of a strategic partnership going forward.
In a press release, Deutsche Bank said it will offer 40 million shares to market currently held by DB Beteiligungs-Holding GmbH, a 100% subsidiary of Deutsche Bank, and currently the sole shareholder in DWS.
The offer equals 20% of DWS’s existing share capital. Deutsche Bank reserves the right to offer another 2.4% to market from its indirect holding.
Additionally, the IPO will make use of a so-called greenshoe option, which means up to 2.6% of Deutsche Bank’s indirect holding can be used to cover over-allotments – dependent on overall demand for the shares. Combined with the upsizing and greenshoe option, up to 25% of the business may be offered.
Nippon Life’s commitment to acquire 5% of DWS applies across the price range. The aforementioned strategic partnership will include distribution, joint product development for an initial period of five years, and the appointment of a representative of Nippon Life to the DWS supervisory board.
Nicolas Moreau, member of the Management Board of Deutsche Bank and CEO of DWS, said: “We are very pleased to have Nippon Life as a cornerstone investor. Our strategic alliance is consistent with, and will help accelerate, our focus on growing in the Asia region. Investors in general have responded very positively to our business model and strategy.”
The IPO price range would raise gross proceeds of €1.2bn-€1.44bn on the 20% stake being offered. An additional €144m-€172m, and €157m-€188m could also be realised from the additional rights to place shares and use of the greenshoe option respectively, Deutsche Bank stated.
The bank would remain the majority shareholder after the IPO, with a stake of between 75%-80%, depending on the excise of additional placement and the greenshoe option.
Following regulatory approval from BaFin, the German Federal Financial Supervisory Authority, shares will be offered to the public in Germany and Luxembourg. Shares will be traded on the Frankfurt Stock Exchange, with trading expected to start on 23 March.
Further details on the prospectus will be made available from www.dws.com/ir subsequent to BaFin approval.
Nippon Life deals
The deal involving DWS represents the second strategic move this month for Nippon Life, which announced on 2 March that it is taking over MassMutual Japan, the business previously owned by Massachusetts Mutual Life Insurance Company.
MassMutual Japan will become a subsidiary of Nippon Life, with the deal expected to complete in May or June this year. The business has been particularly focused on inheritance and gift giving involving high net worth clients in Japan. The acquisition makes strategic sense in a market that has been challenged by ultra low interest rates, for example, with a decrease in yen denominated products offered for sale by life groups, according to statements from Nippon Life.
The deal for MassMutual Japan has been valued at 104.2bn yen (€793m).
With some 70,000 employees and 11.8 million customers, including 216,000 companies, according to its 2017 annual accounts, Nippon Life’s strategic deal with Deutsche Bank for a 5% DWS stake could represent an opportunity to broaden access to this market by DWS products.
Nippon Life counts some 41 asset management businesses across its group operations, including names such as Nissay Asset Management Corporation, Reliance Nippon Life Asset Management Ltd (in India), Panagora Asset Management, Inc. and Post Advisory Group, LLC (both in the US).