Following much speculation as to the future of its private equity arm Deutsche Bank has entered into negotiations with the management team of DB Capital Partners (DBCP) to carry out an MBO of its late stage direct private equity portfolio. The combined book value of the portfolio is around €1.5 billion. Chairman and CEO Ted Virtue and European managing partner Graham Clempson will lead the management team.
Deutsche Bank has been conducting a review of its private equity operations with the aim of reducing its exposure to direct private equity investments. In addition Deutsche Bank and the DBCP management team are in discussions regarding other direct private equity assets with a book value in excess of a further €1.5 billion. The €2 billion fund-of-funds business, which represents around 30 per cent of the business, is expected to remain with Deutsche Bank.
Negotiations are still at an early stage and further announcements will be made as appropriate. The management team did not comment.
The decision to cease investments came earlier this year following chairman Josef Ackermann’s speech at the half year press conference when the bank announced plans to cut €2 billion from its operating cost base by restructuring its retail and private banking businesses and reducing its private equity portfolio to focus on its core businesses.
The move by the bank to reduce its private equity holdings mirrors that of other institutions looking to focus on their core businesses in uncertain climates. UBS recently announced its intention to cease direct private equity investment and will concentrate on managing the existing assets in its portfolio to maximise value for shareholders – also see evcj news this issue for further details.