Deutsche Bank spins out PE biz in Australia(3)

Deutsche Bank has sold DB Capital Partners to its management. It was the bank’s only remaining primary private equity business since a 2002 move to reduce direct exposure to the asset class.

Deutsche Bank has divested DB Capital Partners, an Australia-focused private equity fund management business, to a new independent company, Propel Investments.

DB Capital represents the last direct private equity business held by Deutsche Bank, which decided in 2002 to reduce its exposure to the alternative asset class. The €1.5 billion spin-out of MidOcean Partners was completed in 2003. The deal saw MidOcean continue to manage Deutsche Bank’s legacy Morgan Grenfell portfolio.

DB Capital Australia last year lost two senior deal makers, Gene Lorenz and Rob Nichols, to Nikko Principal Investments. At the time Lorenz and Nichols resigned in February 2006, there were discussions of DB Capital being spun out of the German bank.

Eighteen months on, the former head and director, respectively, of DB Capital, Peter Dowding and Albin Kurti, have become co-managing directors of Propel.

Dowding told PEO in an interview the breakaway from Deutsche has been “very amicable”. The spin-out will now manage two former funds raised under the DB Capital name as well as some funds that are managed under sub-delegation from the bank.

Chum Darvall, chief executive officer of Deutsche Bank Australia and New Zealand said: “This change is consistent with the global trend of successful private equity teams shifting from captive to boutique ownership and has been well supported by our private equity investor clients.”

A three-month transition after Propel reached a formal spin-out agreement with Deutsche Bank will expire at the end of August but the entire former team from DB Capital has already settled into their new office premise in Sydney, Dowding told PEO.

Dowding declined to comment on the financial arrangement with Deutsche Bank.

Kurti, his co-managing director said Propel plans to recruit additional resources to beef up its investment team in the coming months, ahead of fundraising scheduled for early 2008.

Dowding said Propel will be recruiting two more investment professionals to beef up its team of seven including four investment professionals.

Deutsche Bank continues to control a significant private equity fund-of-funds business under the RREEF brand. The group recently closed a $775 million secondaries fund. Earlier this year, Deutsche Bank agreed to buy a majority stake in Dallas private equity advisory group Aldus Equity.