Deutsche Bank Acquires Funds-Of-Funds Business

Deutsche Bank AG has agreed to acquire investment banking group Sal. Oppenheim for approximately €1.3 billion ($1.9 billion), a move that adds another funds-of-funds business to the German bank’s private equity portfolio.

As of June 30, Sal. Oppenheim Group had approximately €5 billion in assets under management in its funds-of-funds business, out of €135 billion in total client assets. As of the same date, the private equity group in Deutsche Bank`s own Private Wealth Management division, with 20 professionals in New York, Singapore, and Zurich, managed more than $3 billion.

The acquisition of the group, including holding company Sal. Oppenheim Private Equity Partners S.A., is expected to close in the first quarter 2010 subject to approval by the respective regulatory and anti-trust authorities. Decisions concerning new management structures and governance will be made and communicated in due course.

Stefan Krause, CFO of Deutsche Bank, explained in a public analyst call following the announcement of the deal that he sees a very good fit between the two private equity businesses, as well as potential for further development of Deutsche Bank’s private equity platform.

The transaction marks a significant boost to Deutsche Bank’s private equity business following a pull-back. From 2002 to 2006, the bank reduced its private equity exposure significantly as part of a restructuring to focus on its core businesses. According to the bank’s 2006 annual report, private equity assets under management fell in 2002 from €4.9 billion in direct investments and €1.8 billion in fund investments to €300 million in direct investments and €200 million in fund investments in 2006.

An attempt by Deutsche Bank to boost its efforts in advisory work by taking a minority stake in Aldus Equity in early 2007 ended badly this year when the founder of the firm pleaded guilty to participating in a kickback scheme involving the New York State Common Retirement Fund. Deutsche Bank ended up selling its stake back to the firm.

The private equity group of Deutsche Bank’s Private Wealth Management division raises money from wealthy individuals and select institutional investors. The program is designed to offer access to top-tier private equity fund managers across various geographies, industry sectors, investment styles and vintages, as well as to direct co-investment opportunities.