Private Equity Giant Cerberus Emerges as New Deutsche Bank ShareholderBy , , and
U.S. buyout fund emerges as a top shareholder of Deutsche Bank
Cerberus had taken a 5% stake in rival Commerzbank in July
Cerberus, controlled by U.S. billionaire Stephen A. Feinberg, declined to say if it has any specific plans for its 3 percent in Deutsche Bank and the 5 percent Commerzbank stake it disclosed in July. Commerzbank has been in discussions with potential buyers, prompting some analysts and investors to speculate that Cerberus could push for a combination of the two banks.
“It’s unlikely that Cerberus’s rationale for its investments in Deutsche Bank and Commerzbank is purely based on the expectation that two banks can be turned around,” said Michael Huenseler at asset manager Assenagon, which owns Deutsche Bank stock. “This is likely to fuel speculation around a merger between the two banks.”
Deutsche Bank reversed declines after Bloomberg broke the news, rising 1.9 percent in Frankfurt, after losing as much as 3.2 percent earlier in the day. Commerzbank gained 1.8 percent after earlier declining as much as 4.9 percent.
Deutsche Bank, in a statement, said it welcomes “every investor who believes in the value potential of the Deutsche Bank share.”
Both lenders held talks about a potential merger last year but decided against pursuing a transaction as they focused on restructuring their own businesses first, a person familiar with the discussions said at the time. Both are now reemphasizing their core German operations and trying to improve their domestic retail businesses, though they’ve struggled to translate that into higher revenue.
“This is revolutionary for Deutsche Bank,” said Ingo Speich, a fund manager at Union Investment, an asset manager that owns about 0.15 percent in the bank. It’s “a clear change in Deutsche Bank’s shareholder structure because it adds a private equity firm.”
Private equity firms typically invest in companies with a view to gaining influence over its operations, often to take them private.
Deutsche Bank Chief Executive Officer John Cryan has settled billion-dollar legacy misconduct cases and raised 8 billion euros ($9.5 billion) from shareholders this year, gaining support from both Qatari investors and HNA Group, people with knowledge of the matter said at the time. Revenue has declined for three straight quarters after he reduced risk in the investment bank and works to integrate the Postbank consumer banking unit.
“We have a constructive view of European fundamentals and believe Germany is a highly attractive place to invest, in particular,” said a spokesman for Cerberus. “There are attractive long-term opportunities in retail and corporate banking due to Germany’s robust economy, high savings rate, and a number of other factors.”
Cerberus is a private investment firm with over $30 billion under management, according to its website. The firm invests across distressed securities and assets, private equity and real estate and also provides financing to middle market companies. Earlier this month, shareholders led by Cerberus listed Austria’s fourth-biggest bank on Vienna’s stock exchange, making it Austria’s largest ever IPO.
Commerzbank’s shares have been helped by takeover speculation, with rivals including BNP Paribas SA and UniCredit SpA expressing interest in the lender to the German government, people familiar with the matter have said. Berlin, which bailed out Commerzbank in 2009, still owns more than 15 percent in the bank.
Deutsche Bank’s top investors include China’s HNA Group, which became the largest shareholder after the April capital raising, with about 9.9 percent of the stock. Other large stockholders include the Qatari royal family and BlackRock Inc., the world’s largest asset manager.
— With assistance by Sarah Syed