Handelsblatt Interview

Buy or Be Bought

112793660 Nicolas Moreau Deutsche AM Bernd Roselieb HB
Deutsche Asset Management chief Nicolas Moreau will soon be striking out on his own. Source: Bernd Roselieb for Handelsblatt

Nicolas Moreau remembers the days when he would get calls asking if his company was for sale. Now, he’s sending a clear message to rivals: Deutsche Asset Management isn’t going to be shy about throwing its weight around once it splits from Germany’s largest bank.

That split should happen sooner rather than later, he said. Deutsche Bank, which has been sapped of cash amid a series of legal scandals and restructuring rounds in the past few years, announced in March that it planned to list about 25 percent of its asset management arm within two years. That move will make Deutsche Asset Management the first publicly-listed investment firm on Frankfurt’s stock exchange, and raise about €2 billion for Deutsche Bank in the process.

Deutsche Bank initially thought it could list as early as the end of 2017. That now seems unlikely. In an interview with Handelsblatt, Mr. Moreau, who heads Deutsche Asset Management, says a listing in 2018 is possible. The subsidiary expects to have fully separated its operations from Deutsche Bank at some point in the autumn months. But exactly when the IPO actually takes place will then depend mostly on capital market conditions.

What happens after that point? Mr. Moreau says investors should expect his company to look for growth opportunities and be aggressive buyers on the open market, even if he won’t necessarily be swallowing one of the industry’s biggest players.

“A series of small to medium-sized acquisitions probably would be better for us than one major transaction. That doesn’t rule out the possibility of us at least considering bigger opportunities, though,” he said. “But a successful IPO is our first priority, and then we’ll be able to turn our attention to such topics.”

There’s a logic to that way of thinking. Size matters in the super-competitive global asset management business, mainly because it allows companies to reduce fees for customers. And Deutsche Asset Management doesn’t have it. A ranking of global asset managers by Scorpio Partnership this year saw the German firm slip five places to 16th globally in assets under management. Even in Europe, players like Switzerland’s UBS and Credit Suisse loom large.

It’s a reality that Mr. Moreau acknowledged. He warned the challenge will be to set Deutsche Asset Management up as a viable global company – “the leading European asset manager” – with a broad business base that can stand on its own two feet. If it fails, it may be gobbled up by someone else.

Read a full transcript of our interview with Mr. Moreau below.

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