Management change at Deutsche Bank may have scuppered RREEF sale

A change of management at Germany’s biggest lender may have been behind the decision to pull the plug on the sale of RREEF, its global alternative asset management business, to US-based asset manager Guggenheim Partners, according to those who track the market.

Deutsche Bank chief executive Josef Ackermann stepped down in May after a decade-long reign to make the way for his two successors Anshu Jain and Juergen Fitschen. The sale might not have gone through due to recent changes in the senior management of Deutsche,’ Matthias Franz, a partner in the capital markets group at C&W in Frankfurt, told PropertyEU. ‘The sales process was started before the change in management, so perhaps the new management wasn’t completely happy with the sale terms,’ he added.

Ultimately, Deutsche Bank may not be flexible enough in terms of the sale price, another German analyst, who asked not to be identified, told PropertyEU. ‘They wanted to sell RREEF but not at any price. Part of the problem is that the business is too diverse to have broad appeal, which makes it hard to find a strategic buyer. That means it could appeal more to opportunistic buyers but they would expect a lower price.’

Now, the onus is on new management to ‘communicate’ what they intend to do with RREEF, the analyst added. There has also been speculation that Deutsche Bank may consider bundling RREEF up with its EUR 3.4bn open-ended fund grundbesitz-europa and selling them as one package. Deutsche Bank could not be reached for comment.

Deutsche Bank has never disclosed its target price for RREEF. However, it is trying to sell various divisions that analysts estimate could have a combined value of between EUR 1.5 bn and EUR 2.2bn. The collapsed sale of RREEF, which has around EUR 47 bn of assets under management, was just the latest in a string of businesses that Deutsche Bank has tried but failed to sell to Guggenheim Partners. The German lender has also tried unsuccessfully to sell DWS Americas, the Americas mutual fund business; DB Advisors, the global institutional asset management business; and Deutsche Insurance Asset Management, the global insurance asset management business, which together comprise Deutsche Bank’s US asset management division.

In addition, the ongoing sovereign debt crisis and recent bank ratings downgrades are not helping to push sales through. ‘If Deutsche Bank gets another interesting offer for RREEF, they will have to consider it,’ Franz said. ‘It’s all about RREEF’s ability to raise new equity and they are competing with many other fund managers in a challenging market environment,’ he said.