The investment unit of Deutsche Bank AG is the latest asset manager to target the ultra-wealthy in a bid to grow its alternatives business.
(Bloomberg) — The investment unit of Deutsche Bank AG is the latest asset manager to target the ultra-wealthy in a bid to grow its alternatives business.
DWS Group is approaching high net worth individuals and family offices globally, Paul Kelly, the head of its Alternatives unit, said in a phone interview with Bloomberg News. He sees an opportunity to tap into demand for assets such as real estate and private credit.
“It’s the holy grail from a fund-raising perspective,” Kelly said. “The sticking point is usually around liquidity, and how easily investors can access their capital and on what terms.”
Concerns about illiquid investments are growing after a series of global shocks highlighted risks for investors locked into positions as well as the wider financial system. Property investments face particular strains as valuations weaken, with Blackstone Inc.’s giant real estate trust for wealthy individuals, dubbed BREIT, limiting withdrawals for a ninth consecutive month in July, although redemption requests have eased.
To help soothe investors’ fears, DWS is designing bespoke opportunities for its private wealth channel, according to Kelly. “We’re trying to match the risk/return and lock-up periods. But overall there’s a lot of interest for higher returns, especially when the risk/return profile is strong,” he said.
Kelly joined DWS from Blackstone earlier this year to help drive the asset manager’s expansion into private credit, which Chief Executive Officer Stefan Hoops has made a key plank of his growth strategy. DWS’s Alternatives business had €115 billion in assets under management at the end of June. Last year, Deutsche Bank also expanded its wealth-management services globally as part of its ambitions to become the euro area’s largest private bank.
Private credit opportunities, which are similar to private equity but involve lending to a company instead of acquiring it, have expanded rapidly in numerous sectors. Giants such as Apollo Global Management Inc. and KKR & Co. are piling into the market, with the world’s wealthiest individuals representing a chance to expand their customer base beyond the usual pension funds and endowments as it becomes tougher to raise money.
Read More: Apollo Global Builds Team to Target World’s Top Family Offices
Wealthy families are also showing up more often in the world of alternative investments. Germany’s Struengmann brothers agreed Monday to lead the purchase of a hand-sanitizer maker owned by Swedish private equity firm EQT AB, marking at least six deals involving the billionaire family and the buyout firm in the past decade, according to data compiled by Bloomberg.
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