Private Equity – Smart money on buyout for DKB Private Equity

The acrimonious breakdown of the proposed merger between Deutsche Bank and Dresdner Bank was attributable largely to the question of what to do with Dresdner Kleinwort Benson. Dresdner has accused Deutsche over a breach of trust’ by threatening to close or dispose of most of DKB, described as the group’s jewel’. Not surprisingly, even before the merger plans finally came off the rails, staff were leaving DKB in droves. After the break-up, as has been well documented, ritual sacrifices in the form of self-immolation took place in the highest echelons of both banks.

A the dust settled, Lenny Fisher was appointed CEO of investment banking at Dresdner, which will now form a separate management board to run the investment banking business. All decisions concerning the investment banking side will be made by the new management board, rather than the Vorstand. DKB’s corporate finance head Tim Shacklock, meanwhile, will take a seat on the Vorstand.

Although DKB Private Equity is sheltered under the investment banking umbrella within DKB, it is a separate legal entity and is therefore likely to be largely unaffected by the new arrangements. However, sources close to the private equity group confirm that it is discussing how it might fit into Deutsche and DKB going forward. Rumours that its third-party clients are unhappy with the uncertainty are almost certainly well founded – not least because a projected fund raising has been set back by the Deutsche/Dresdner fiasco. Investors dislike uncertainty; neither are they particularly keen on potential conflicts of interest or needless delays: as one affected party says, “We can’t just sit around for six months while Dresdner decides what to do with it”.

DKB Private Equity declined to comment directly on its plans for the future – a refusal that could be interpreted as lending credence to talks of an imminent buyout.