A Japanese Giant Banks on Buying a Slice of Another Big Asset Manager
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Wednesday, March 14, 2018

A Japanese Giant Banks on Buying a Slice of Another Big Asset Manager

For the second time in less than four months, a certain big Japanese insurer is poised to buy a sizable minority stake in a multinational asset manager with a big U.S. presence and 12 figures of AUM. This time the giant is buying in via an IPO, shortly after divesting from yet another U.S. asset manager.

Deutsche Bank AG and Nippon Life Insurance Company both confirm that Nippon Life has agreed to buy a five-percent stake in DWS, Deutsche Bank's asset management arm led by Nicholas Moreau, when DWS IPOs soon. The current expected IPO date is March 23. The Financial Times and Pensions & Investments both reported on Nippon Life's DWS move.

Deutsche Bank now confirms that it plans to sell a total of 40 million shares of DWS, a 20-percent stake, for between 30 and 36 euros ($37.17 to $44.60) per share. That puts the size of Nippon Life's investment at between $371.7 million and $446 million, out of $1.4868 billion to $1.784 billion for the whole IPO. Deutsche could sell up to 10 million extra DWS shares if the IPO goes well (which translates into between $371.7 million and $446 million more).

The IPO price range implies an overall DWS valuation of between $7.43 billion and $8.92 billion. Given that DWS had $840 billion in AUM as of September 30, 2017, that price range translates into between 0.885 percent and 1.06 percent of DWS' AUM, similar to the 0.9 percent to 1.2 percent of AUM range implied by DWS IPO pricing rumors reported on last week.

That DWS price-to-AUM ratio also works out to be similar to the 0.99 percent of AUM that Nippon Life paid (based on a rumored $489.5-million price tag) in December for a 24.75-percent stake in TCW, a Los Angeles-based fixed income asset manager backed by private equity.

Meanwhile, last month Nippon Life confirmed plans to divest from another U.S. asset manager, PanAgora Asset Management. Nippon Life previously owned a 20-percent stake in PanAgora, which it sold to Putnam while buying back a Putnam's stake in Nippon Life's Nissay Asset Management subsidiary.

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