Brookfield’s talks to acquire DWS secondaries unit represent niche buy

Brookfield Asset Management, the 35th largest secondaries firm by fundraising, according to the SI 50 ranking, is in talks to acquire the specialist secondaries unit of DWS.

The Toronto-headquartered asset manager is in the final stages of talks to take over the unit, according to two sources familiar with the matter.

The development comes around one month after DWS chief executive Stefan Hoops, speaking on the bank’s 2022 Capital Markets Day, said that while alternatives was a key pillar for the firm, it would be focusing on commercial real estate and infrastructure.

Bloomberg first reported that Brookfield was in discussions with DWS.

Acquiring DWS’s secondaries group would be a slight departure from a traditional private equity secondaries buy: the asset management arm of Deutsche Bank’s specialist unit focuses on what it refers to as ‘mid-life co-investments’, Mark McDonald, managing partner and head of the group, told affiliate title Private Equity International in 2021.

The unit lost senior principal Rodrigo Patino to Jefferies Financial Group, moving over to the investment bank in October to lead European GP-led secondaries deals. His departure followed that of Kumber Husain, DWS’s head of private equity Americas, and Daniel Green, its head of PE EMEA, who left and joined Audax Group to build a secondaries strategy last year.

Brookfield has been building up its secondaries offering over the past three years. It began with the hire of two Partners Group executives focusing on real estate secondaries, and has since pushed into infrastructure secondaries. It planned to roll out its strategy into private equity in 2021, following a similar strategy to its real estate business by focusing on GP-leds, Secondaries Investor reported in 2021.

Asset managers buying secondaries businesses has been a hot trend over the past year to 18 months, with Ares Management, Franklin Templeton, KKR and PGIM examples of firms that have either mulled this or done so.

Spokespeople for both Brookfield and DWS declined to comment.