Reports today are suggesting that an MBO of DB Capital is being actively discussed amongst top Deutsche Bank and DB Capital executives as the bank, under new chairman Josef Ackermann, seeks to reduce its exposure to what it regards as a non-core business with a severely devalued portfolio.
The collapse in technology and telecommunications company valuations is said to have had a significant impact on DB Capital and the bank is eager to evidence a proactive approach to minimising more bad news in the form of further portfolio write downs.
The bank had already signalled its readiness to sell up to 70 per cent of the DB Capital portfolio, a move that had both DB Capital global head Ted Virtue and European head Graham Clempson scrambling to reassure both limited partners and staff that the private equity business still had a future either within or outside Deutsche Bank.
The Financial Times today reports that Deutsche is considering selling the entire portfolio, retaining and slowly liquidating it or selling the business to its management. The paper also reports that Ackermann has already held tentative talks with Henry Kravis of KKR about a sale of the portfolio and that both Merrill Lynch and Goldman Sachs have also signalled their interest.
Virtue and Clempson are said to have already held talks with NIB Capital and high net worth individuals based in the Middle East about the backing of an MBO, something that other private equity groups within investment banks have sought as a means to achieve independence from often disillusioned owners. New York-based Virtue has himself been acutely aware that Deutsche was scrutinising his business closely at a time when other investment banks were declaring massive write downs in their private equity operations, most notably the US investment banks such as JP Morgan Chase, which Deutsche has sought to emulate. This did not stop him from developing new areas of the business though, such as Fund of Funds management, and his team has also been busy raising a number of new funds. As he recently commented to PEO: ' other banks have struggled to make this business work for them, so we've got a lot to prove.'