Like UBS and Societe Generale, Deutsche Bank’s researchers are now forecasting a resurgence in M&A and say investors should “prepare to ride the wave”.

They concede that “picking actual as opposed to potential M&A targets is a notoriously difficult exercise” but have come up with 30 potential European targets, based on strategic and financial criteria. While bank lending remains a problem, they say that is not always an insurmountable hurdle, and should spur more stock-based deals (see graph below).

In a note dated Nov. 4, the DB team writes:

“Following two years of below-normal levels of merger and acquisition (M&A) activity in Europe, we believe the conditions are in place for deals to return to the fore as a major driver of returns: Public markets are well and truly open for financing, low organic growth should spur expansion by acquisition, rising equity markets and sub-peak valuations make stock an attractive acquisition currency, and confidence is returning to boardrooms and executive offices.”

Here are their 30 top targets:

Sprint Nextel’s stock soared 11 percent before the market opened on a British newspaper report that T Mobile parent Deutsche Telekom had appointed Deutsche Bank to advise on a possible run at Sprint, valuing the U.S. cellular carrier at $11 billion.

Sprint certainly is a logical target for any company looking to boost its position in the very busy U.S. mobile market. It announced a large goodwill write-off in February 2008

And Deutsche Telekom is on the make. It signed a deal with France Telecom to combine the companies’ British mobile phone businesses — T-Mobile UK and Orange — last week.

A Sprint deal would make T-Mobile the top U.S. mobile company, but it would cost a bundle … and that’s just the up-front funding. Combining Sprint’s CDMA and T Mobile’s GSM technologies would take technological wizardry no less daunting than the magic the German carrier might have to employ in Washington to ensure a deal clears antitrust and other regulatory hurdles.

So while the hype could last through the day, any near-term excitement about a mega mobile merger could well be tempered by the time your next phone bill arrives.

Boutique investment bank Rothschild appears to be joining others such as Moelis and Greenhill in tapping investment banking talent that’s coming lose amid the financial crisis.

Rothschild, a more than two centuries old family-owned business, is planning to hire financial institutions and other investment bankers in the United States, a source briefed on the matter said. 

A Rothschild official wasn’t available for comment.

In October, the bank snapped up some FIG bankers in Europe, including from Lehman. Antonio Villalon, a Lehman vice chairman, was named as the co-head of its global financial institutions group.

The interest in the financial institutions sector is, of course, due to expectations of even more activity as things begin to look better in the economy. 

Moelis, which has already hired some 15 managing directors this year, is also looking for FIG bankers. Deutsche Bank and Greenhill have also already hired a bunch. 

Other active sectors have seen investment banks across the spectrum bulk up on talent as well, a recent - and remarkable — case being that of an exodus of healthcare bankers from UBS to Jefferies.

Deutsche Bank, the underdog in the race to run the IPO of a large AIG unit, has come out on top.

The German bank has been chosen as one of two global coordinators to run the IPO of American International Assurance (AIA), beating out Goldman Sachs and Citigroup, which ran the aborted auction of the Asian life insurer earlier this year.

Morgan Stanley, the other global coordinator, is no surprise. The bank has been advising the Fed since the September implosion of AIG, and on top of its own expertise, regulators wanted it in.

At a time when few deals are gettting done, the AIA flotation will be a big one. In fact, it will be the biggest Hong Kong IPO since April 2007 and a fee bonanza for the banks. Coordinators and bookrunners typically earn around 3 percent in fees — so a $5 billion IPO could produce at least $150 million in fees split between the banks. More than 30 banks applied for the job.

Deutsche, of course, is no babe in Asian IPO woods. As our colleague Michael Flaherty in Hong Kong points out, Deutsche was the joint global coordinator of China Life’s $3.48 billion IPO in December 2003, and was among the banks that handled the $19.1 billion IPO of Industrial and Commercial Bank of China in October 2006. 

The banks that did not make the cut still have hope, though. There are spots left to be filled for bookrunners and co-managers of the IPO, which is not expected to actually happen until the first half of 2010.

Investors have welcomed the prospective £3bn (US$4.4 billion) sale of iShares by Barclays, which gives strong hope that the bank can avoid accepting a UK Government bailout and its implicit restrictions.

Since the deal announcement, Barclays’ shares have risen by 26 percent to 198.8p, their highest point since October, when a rescue £7.3bn financing was arranged with royal potentates from Qatar and Abu Dhabi. These Gulf investors agreed to subscribe for an effective 31percent stake through separate issues at 153.3p and 197.8p. Now, both slugs are “in the money”. However, that cash has not come cheaply.

The £4.3 billion of mandatorily convertible notes, which must be converted into shares at 153.3p by the end of June, receive a 9.75 percent coupon. And the £3 billion of reserve capital instruments pay 14 percent annually, or £420 million, for 10 years. They have warrants convertible at 197.8p.

The iShares proceeds could neatly pay off the holders of the reserve capital instruments. Removing that shackle is the aim of chief executive John Varley, and Barclays Capital boss Bob Diamond in particular. Then dividends could flow freely again. Diamond’s other goal is to make Barclays Capital an investment bank to challenge the few remaining serious players with global scope, such as JP Morgan, Goldman Sachs, Morgan Stanley, Deutsche and the Swiss banks.

The purchase of Lehman’s US advisory business, together with heavy recruitment across the Middle East and Asia, are helping Barclays catch up. But Goldman is extending its lead, after Monday’s strong first-quarter results and $5 billion share sale plans. The money Goldman raises will help pay back US Government funds. Barclays wants to pay off its Gulf rescuers too. However, the iShares sale will only add £1.5 billion net to Barclays balance sheet, bearing in mind iShares’ £1.5 billion book value.

So to pay off the reserve capital instruments and keep Tier 1 capital above the expected 7.2 percent, a higher bid needs to be found. The novel “go-shop” deal structure gives Varley and Diamond until June 18 to solicit such offers. However, a higher bid is unlikely. CVC has offered a generous 10 times historic EBITDA and Barclays is already putting up debt worth 70 percent of the sale price.

Selling all of Barclays Global Investors is an alternative. That could raise £6.73 billion on the same valuation as CVC’s offer for iShares, the smaller but higher margin part of the business.

Reporting by Chris Spink, from Acquisitions Monthly

(PHOTO: A video grab image shows Chief Executive Officer (CEO) of Barclays, John Varley, speaking to the House of Lords Economic Affairs Committee in London March 17, 2009.  REUTERS/Parbul TV via Reuters TV)

Deutsche Bank’s latest writedown comes with a reality check - the global credit crisis it had largely fought off is still snarling away. The top German bank’s $3.6 billion in fresh writedowns come with a reversal of optimism from CEO Josef Ackermann. “We remain cautious for the remainder of 2008,” he said as his bank became one of the world’s top crisis casualties. As late as November, Ackermann had been suggesting no further writedowns would be necessary, and had stood by a 2008 pretax profit goal of 8.4 billion euros. Now, with no indication that the books are completely cleaned of toxic paper, further write-offs seem a lot less unlikely and that full-year profit goal is going quietly by the wayside.

Japan’s TDK Corp said it plans to buy German electronic parts manufacturer Epcos for $1.9 billion in cash, as it pursues growth overseas and seeks to expand sales of industrial-use components. TDK said in a statement it would launch a friendly tender offer for all shares of Frankfurt-listed Epcos, offering 17.85 euros ($27.81) per share, a 29 percent premium to the closing price on Wednesday and valuing the deal at 1.2 billion euros. TDK said the offer would begin at the end of August. The acquisition is expected to boost TDK’s global market share of capacitors and inductors just as price falls hit earnings at rivals such as Murata Manufacturing and Kyocera, analysts said.

Global lender HSBC is likely to stand firm on its $6.3 billion bid to buy Korea Exchange Bank from U.S. private equity firm Lone Star as a formal deadline looms, cheered by a more accommodating South Korean government. The long-running deal, mired in outstanding legal issues, is seen as a test of whether South Korea is genuine in its pledge to open its financial sector wider to international investors. A successful deal would be the biggest cross-border move in South Korea’s banking sector and catapult HSBC into the ranks of the country’s top local banks.

Other deals of the day:

* Swedish media company Modern Times Group said it had signed a deal to buy Nova TV Bulgaria for 620 million euros ($966 million) in cash, expanding its reach in eastern Europe.

* Serbia is to go ahead with the sale of up to 51 percent of JAT Airways valuing the flag-carrier at about 100 million euros ($156.2 million), said the country’s privatization agency.

* Finland’s Atria has agreed to buy loss-making pigs-to-pizza group Campomos in Russia from Spanish Campofrio Alimentacion for 75 million euros ($116.9 million), it said.

* Japanese drug maker Daiichi Sankyo is yet to receive Indian regulatory approval for an open offer for Ranbaxy Laboratories, and so will not launch it on Aug. 8 as previously planned.

* Indian plastic products maker Sintex Industries said its unit has acquired 90 percent in German auto component maker Geiger technik GMbH, at an enterprise value of 35.6 million euros.

Once upon a time, bank analysts were uniformly upbeat on investment banks. “Sell” ratings were nearly unheard of, and potholes in balance sheets were never as big as the huge, routine earnings beats. Now, with Goldman Sachs’s sector u-turn perhaps at the apex, there is plenty of mud to go around. Today’s hit list includes Barclays, the recipient of 4.5 billion pounds in balance-sheet aid this week. Citigroup says Britain’s third-biggest bank may need to raise a further 9 billion pounds and could take more significant write-downs. Lehman Brothers analyst Roger Freeman took aim at Merrill Lynch, saying the big broker will probably see $5.4 billion of write-downs in the second quarter, mainly from its exposure to monolines. Freeman raised his write-down view by $3 billion for Merrill, making his estimate the highest among Wall Street analysts.

Merger activity in the United States dropped 29 percent in the second quarter, faring better than the 40 percent global slump, as corporations filled the void left by buyout firms and targeted big consumer brands such as Anheuser-Busch and Wrigley. “Strategic buyers see an opportunity here due to the absence of the financial buyers. For the last 24 months, prior to the downturn, strategic buyers were getting outbid by financial buyers. That’s not happening now,” said Bob Filek, a partner with PricewaterhouseCoopers’ transaction services. During the first half of the year, private equity deal volume dropped 85 percent in the U.S. and 76 percent globally, according to Thomson Reuters data.

A couple more European banks have increased their China exposure. Deutsche Bank signed a deal with Shanxi Securities to set up an investment banking venture, a source with knowledge of the deal said on Friday. Deutsche planned to take 33 percent of the envisioned Beijing venture, the most allowed. Beijing this year re-opened its coveted but shuttered securities industry to foreign firms after a hiatus of more than a year to let local players merge and strengthen. Several banks, including BNP Paribas, have since expressed an interest in setting up local ventures. Chinese stock markets have shed nearly half their value this year, but foreign banks remain keen on securing a foothold there with an eye on the longer term. Royal Bank of Scotland has won approval from Chinese regulators to buy a nearly 20 percent stake in Suzhou Trust as it expands in corporate banking and wealth management services in China, sources with direct knowledge of the situation said. Suzhou Trust is a mid-sized trust and investment firm.

Other deals of the day:

* French insurer Groupama said it had bought Turkish insurers Guven Sigorta and Guven Hayat for 350 million lira ($287 million) from the TTKMB association of agricultural credit cooperatives.

* Telstra, Australia’s largest telephone firm, expects strong revenue and profit growth at its newly acquired Chinese online advertising websites.

* Mexico’s KOF, the world’s second-largest bottler of Coca-Cola drinks, said it acquired Brazilian soda maker and brewer Refrigerantes Minas Gerais Ltda for $364.1 million.

* New Zealand dairy cooperative Fonterra and National Foods have had talks about a possible joint bid for Australia’s Dairy Farmers, which is valued at up to A$1 billion ($961.5 million), a source familiar with the situation said.

* Russian mid-sized bank InvestTorgBank said its Russian owners had sold just under 40 percent of the bank in two stakes for a total of 5 billion roubles ($213 million).

* Australian-listed miner Herald Resources advised its shareholders to decide themselves on which of two rival takeover bids to accept.