Deutsche Bank and its asset management arm DWS have launched an ambitious plan to mobilise private capital to drive the transformation of Europe’s economies in the face of geopolitical uncertainty and climate change.
The German groups said substantial investments would be needed in the coming decades for Europe to transform its economies, reduce external dependencies, and build a sustainable industry landscape – as the continent seeks to protect its high level of living standards and to lay the foundations for future prosperity.
Change would be required in several strategic areas, including the EU green transition and digital transformation, the duo argued, noting that they were ‘uniquely positioned’ to play a vital role in making it happen.
According to EU Commission estimates the EU green transition and digital transformation will require at least €595 bn per year in the transport, buildings, power, and industrial sectors.
Deutsche Bank believes it can leverage its client access to both investors and companies to help bridge financing gaps, while DWS sees a role for itself in mobilising private capital to bridge funding shortfalls.
To this end, DWS intends to launch a family of ‘investment solutions’ focussed on various aspects of European transformation, starting in 2023. These will cover not only transformation areas that have already been identified, such as the green transition, energy, infrastructure, and commercial and private real estate, but also offer investors the option of targeted investments in various asset classes.
DWS’s goal is to raise up to €20 bn of capital by 2027 through such existing and new investment solutions.
Karl von Rohr, president of Deutsche Bank and of supervisory board chairman of DWS, said: ‘In the face of geopolitical uncertainties and a need to drive technological change and to become more sustainable, Europe needs to transform its economies. As private capital will be key to unlock investments at scale, banks and asset managers will play a vital role in making European transformation happen.’
Von Rohr added that the transformation would be driven largely by small and medium-sized enterprises with no direct access to capital markets or other sources beyond credit. ‘Deutsche Bank Group is ideally positioned to bridge this gap: we can finance these through our well-established relationship management channels at the corporate bank and investment bank, offer direct access to capital markets or cooperate with our asset manager DWS to make these financings investable for our private and institutional clients.’
Stefan Hoops, CEO at DWS, commented: ‘DWS has a long track record in providing investment solutions with a focus on various aspects of transforming industries, in particular in the real estate and infrastructure sectors. On the back of this experience, we will leverage our already existing products as well as offering a dedicated family of new investment solutions to allow private capital to increasingly invest into European transformation.’
Besides leveraging the partnership with Deutsche Bank’s private bank, corporate bank and investment bank, DWS aims to collaborate with government agencies and other stakeholders in transformation projects to invest into strategic areas, industries and companies.
To help inform decision-making in politics and the industry, the asset manager will establish a European University Partnership Programme, starting with the Frankfurt School of Finance & Management.
Said Hoops: 'We are proud to partner with Frankfurt School of Finance & Management to lay the foundation for academic excellence and practical relevance in the Centre for European Transformation. With it we want to create Europe’s leading think tank connecting academics, business leaders and government officials to address the challenges of the 21st century together and to foster sustainable transformation and growth in Europe.'
DWS will also publish its own research with the first report to be released in December 2022.