Stefan Hoops, a few months into his tenure as CEO of Deutsche Bank AG’s asset management division, outlined a growth strategy that emphasized building a “private debt muscle.” Nearly three years later, that initiative is struggling. DWS Group, based in Frankfurt, is finding it difficult to secure significant investments for a private credit fund aimed at raising €1 billion ($1.05 billion), according to sources familiar with the situation. Additionally, several senior sales personnel have been leaving for better-paying opportunities at U.S. competitors. With his strategy to capitalize on the booming $1.6 trillion private credit market not gaining traction, Hoops, 44, is now planning to invest more time into revitalizing the business. One potential approach is to leverage Deutsche Bank’s client relationships more effectively for direct lending.
DWS is among the newer entrants facing challenges in the increasingly competitive private credit sector, where even industry giants like BlackRock have resorted to acquisitions to expand rapidly in a market that Moody’s predicts will grow to $3 trillion by 2028. For some traditional active fund managers, the promise of high returns and management fees is becoming elusive without substantial deals. Last year, Fidelity International ceased its European direct lending operations and reduced its private markets team. In contrast, U.S. alternative investment firm Ares Management Corp. recently announced it raised €30 billion for its latest European direct lending fund, the largest in the region.
Before taking the helm at DWS in June 2022, Hoops had limited experience in asset management and was brought in to stabilize the firm following controversies over its environmental claims. The underperformance of the private credit segment represents a significant challenge for him. At Deutsche Bank, Hoops gained recognition from CEO Christian Sewing for his calm demeanor during a period when the bank faced potential costly settlements in the U.S. As the head of the corporate clients unit, he played a key role in the bank’s recovery from prolonged struggles with negative interest rates. He also achieved some successes at DWS, including resolving issues with U.S. regulators regarding greenwashing allegations and overseeing a 16% increase in total assets under management to €963 billion by the end of September, largely due to inflows into lower-margin passive funds. The company’s shares have outperformed those of its European counterparts in recent years. Now, Hoops’s credentials will be tested as he seeks to navigate these challenges.
