Deutsche Bank's DWS Unit Holds Ground in Tough Week for IPOs

(Bloomberg) -- Deutsche Bank AG’s DWS Group held its ground on the first day of trading, marking a positive step for Chief Executive Officer John Cryan in a troubled week for European initial public offerings.

Deutsche Bank sold slightly less than the maximum number of shares in the asset management unit at just below the middle of the original target price range. The stock was little changed in Frankfurt trading, near the sale price of 32.5 euros a share. The offering values the unit at about 6.5 billion euros.

DWS’s trading debut comes at the end of a lackluster week for some European share sales. Norwegian silicon manufacturer Elkem ASA slumped on its first day of trading after pricing at the lower end of its range, while in the Netherlands, Alfen Beheer NV’s IPO priced below the range sought by the industrial company. NIBC Holding NV, a Dutch bank backed by private equity firm J.C. Flowers & Co. dipped below its sale price in its trading debut on Friday.

“It was a difficult pricing exercise,” Nicolas Moreau, head of the asset manager, said in a Bloomberg Television interview on Friday. “The last weeks have been quite volatile, but given the outcome of the first quotation, I think we did it properly.”

Cryan announced the IPO 12 months ago as part of a larger restructuring, saying that a public listing will give greater flexibility to the unit. While DWS won’t get any proceeds from the IPO, it struck distribution agreements with Nippon Life Insurance and French asset manager Tikehau, both of which took large stakes in the company.

‘Headwinds’

The IPO marks a positive step for Cryan after a week in which the bank’s stock was buffeted by comments that its investment bank is suffering from “headwinds” related to foreign exchange and funding costs. While DWS was little changed, Deutsche Bank fell for a third day, declining 3.3 percent at 9:35 a.m. in Frankfurt.

The Nippon Life deal will also see DWS manage money on behalf of the Japanese company, while the one with Tikehau stresses cooperation in alternative assets, an area Moreau is focused on.

Deutsche Bank sold 4.5 million shares of the maximum 10 million-share over-allotment. It initially set a price range of 30 euros to 36 euros. The bank sold 44.5 million shares in the unit, or about a 22.25 percent stake in DWS, compared with the maximum 25 percent shareholding that Deutsche Bank wanted to sell.

Swiss IPOs

It’s not all gloom. In Switzerland, shares of digital microsensors and systems manufacturer Sensirion Holding AG jumped almost 30 percent Thursday in its trading debut after pricing at the top end of the range.

DWS, which oversees about 700 billion euros for clients, plans to invest 90 million euros hiring about 100 staff over the medium term to reinforce distribution, the investment platform and its digital capabilities. The unit employed 3,901 people at the end of 2017, according to the IPO prospectus.

©2018 Bloomberg L.P.

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