Given the solid demand for share sales in the Asia-Pacific region, Deutsche Bank AG DB intends to restore its equity capital markets(ECM) services in the region. The news was reported by Bloomberg.
While the German bank had closed majority of its ECM business in the region in 2019, as part of its rebuilding plan, it intends to hire 10-12 bankers in roles across the spectrum to assist the ECM business. The number of hires might be subject to change.
Deutsche Bank wants to capitalize on the growing demand for initial public offerings, with more than $200 billion raised so far this year, per Bloomberg’s data. Also, continued upsurge in special purpose acquisition companies (SPACs) and increasing focus on Asia seem other reasons for the company’s strategic move.
Following the similar lucrative strategy pursued in its counterpart in the United States, Deutsche Bank’s Asia ECM unit will likely focus on a combination of SPACs, technological companies, and existing established clients, instead of just focusing on small to mid-sized companies.
The bank currently holds the 29th position in the Asia-Pacific equity offering, making around $738 million in deal credit, according to Bloomberg league tables. Some of the notable transactions that Deutsche Bank advised on in the region include the $4.6 billion worth U.S. IPO of the South Korean e-commerce biggie, Coupang Inc. CPNG and the $689 million worth Hong Kong listing of the online car-selling platform, Autohome Inc. ATHM.
Our Viewpoint
Plans to revive the ECM business in Asia will likely help Deutsche Bank to offset adverse impact of low interest rates on the top line. This, along with the company’s efforts to improve operating efficiency is likely to support profitability.
Shares of Deutsche Bank has gained 47.1% over the past year, outperforming industry’s growth of 45.6%.
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Currently, Deutsche Bank carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stock to Consider
KB Financial Group Inc KB has been witnessing upward estimate revisions for the past 60 days, with the company’s shares appreciating nearly 36.4%, in six months’ time. It sports a Zacks Rank of 1, at present.
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