What happened to Deutsche’s primary PE business?

CAM Private Markets bought the remainder of Deutsche Asset Management's primary business, the culmination of years of mergers, acquisitions and internal ructions.

“Two Cologne-based private equity specialists with a long and successful shared history are reunited.”

That was how CAM Private Markets, a German alternative asset manager with €1 billion under management, described its agreement to acquire DB Private Equity – essentially what was left of Deutsche Asset Management’s primary private equity business.

For Deutsche AM, the March announcement was the culmination of several years of mergers and acquisitions, personnel changes and internal ructions that pushed its private equity group to the margins.

For CAM,  it was an opportunity to see if its chief executive still has the golden touch with investors he demonstrated when he founded DBPE’s forerunner, Cologne Asset Management, nearly 20 years ago.

Cobbled together

The story of DBPE is a complex one. It managed Deutsche AM’s private equity and infrastructure funds of funds and separately managed accounts. The core of its staff came from Cologne Asset Management, founded in 1999 by Rolf Wickencamp, chief executive and founder of Wickencamp Consulting, which owns CAM Private Markets.

Cologne Asset Management was sold in 2008 to private bank Sal Oppenheim, which also acquired Munich-based VCM Capital Management, another funds of funds manager. This was part of a wave of consolidation in a German market struggling to raise capital in the wake of the financial crisis.

In autumn 2009 Deutsche Asset Management bought Sal Oppenheim as part of a €1 billion deal that saved the lender from collapse. The constant changes caused disquiet among investors.

“Investors don’t like change,” said one GP focused on the DACH market. “They want consistency and continuity. Think about the number of entities involved, fundamentally good entities, which ended up falling into the arms of Deutsche Bank, a major corporate.”

In April 2010 the assets acquired from Sal Oppenheim, Deutsche AM’s secondaries team, and the private equity group from Deutsche’s private wealth management business were merged and given the name DBPE. They accounted for around €6 billion of assets under management.

Around the same time DBPE was placed under the management of Chris Minter, who came to the role from an internal corporate development role, head of corporate investments. According to a source who was there, his lack of direct experience in private equity made clear the rudderless-ness inherent in DBPE’s founding. Minter left the bank in October 2012, taking up a corporate development position at reinsurer Swiss Re.

At parent level, Deutsche Bank’s head of global equities Kevin Parker lost out to his fixed-income counterpart Anshu Jain in the battle to lead the newly combined team, with Parker becoming head of asset management. The bank underwent a strategic review in 2011, the results of which led it to try, and fail, to sell several “non-core” parts of its asset management business, with backing from Guggenheim Partners.

The chopping and changing has caused disquiet among DBPE’s employees. Several left, some, in 2016, for CAM Private Markets, including CAM’s co-founder Frank Albrecht and vice-president Daniel Czimer, according to their LinkedIn profiles. DBPE had been earmarked for sale for at least a year prior to CAM Private Markets’ intervention, according to a source who was there.

“The Cologne business had been loss-making for a while and within the Deutsche structure there was no obvious path to raising a lot of money,” the source said. “The team tried to spin out by themselves in the past. Obviously they had an ongoing relationship with [Rolf] Wickencamp from the days when he was their boss.”

What now?

Now that DBPE has been reunited with Rolf Wickencamp, the market awaits his next move. Sources told PEI Wickencamp is well connected with German institutional investors and that he has won several large separately managed accounts in recent years. In addition to his role in founding DBPE, he has served as chief financial officer of Liechtenstein Global Trust, the parent of LGT Bank and LGT Capital, according to his LinkedIn profile.

For DWS, Deutsche Asset Management’s rebranded private equity business, the sale of DBPE was part of a broader strategic shift from primary to secondaries private equity, which also included the sale of its US Private Equity Access Fund Platform to iCapital Network in September.

Since its secondaries team’s August spin-out, DWS has been on a rebuilding mission. In December it hired former global head of secondaries advisory at Credit Suisse, Mark McDonald, as its global secondaries head and in January appointed Daniel Green, the senior director of private markets for EMEA & Asia at Meketa Investment Group, as EMEA head of private equity secondaries. It is understood the firm will seek capital from third-party investors at some point in the near future.

As for primary fund of funds investing, DWS has no immediate ambitions to return to this strategy, according to a source familiar with the firm.

For both sides, the deal represents a new start. DWS can double down on its new secondaries business, while DBPE, under new ownership, can re-establish itself as a significant force in the DACH region.