Recently, Deutsche Bank Aktiengesellschaft DB formalized its intention to list a minority stake of its €700 billion asset management arm — DWS — by publishing a document.
The bank plans to sell existing shares on the Frankfurt Stock Exchange in the earliest available window. Further, the company will be listed as a partnership limited by shares or KGaA, under which external shareholders are given lesser control rights than in a normal stock company.
Per a Financial Times article, the IPO is likely to raise about €2 billion and the shares might start to trade by Mar 19.
Per Nicolas Moreau, CEO of DWS, “The planned IPO will give us the opportunity to unlock the full potential of DWS for clients and employees, while targeting attractive returns for our shareholders.”
Also, DWS disclosed its impressive medium-term target of net inflows of 3-5% of assets under management every year and a management fee margin of nearly 0.3%. Notably, the company aims to reduce its adjusted cost income ratio to less than 65%. DWS plans to distribute 65-75% of reported net income as dividend.
With €513 billion in active assets, €71 billion in alternatives and €115 billion in passive assets, DWS is currently ranked among top five asset managers in Europe. Further, the segment’s performance improved significantly in 2017. It reported net income of €725 million against net loss of €206 million in 2016. DWS benefited from €16 billion of net inflows during the year.
After reporting an annual loss for the third consecutive year, this IPO would give John Cryan, CEO of Deutsche Bank, a chance to bolster the bank’s financial position. Nevertheless, Deutsche Bank’s bottom line continues to remain under pressure due to low interest rates and persistent legal hassles.
Shares of the company have gained nearly 1% in the past six months, underperforming 10% growth of the industry it belongs to.
The stock has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the same space are ING Group, N.V. ING, BNP Paribas SA BNPQY and The Toronto Dominion Bank TD.
ING Group has witnessed upward earnings estimate revision of 7.8% for 2018, over the last 30 days. Its share price has increased 2.3% in the past six months. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BNP Paribas’ earnings estimates for the current year have been revised nearly 1% upward over the last 30 days. Its shares have gained 4.9% in the past six months. It carries a Zacks Rank of 2.
Toronto Dominion also carries a Zacks Rank #2. The company witnessed an upward earnings estimate revision of 4.3% for the current year, over the last 30 days. Its share price has increased 13.8% in the past six months.
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