Rothschild family to invest in private investment bank

Concordia, a family holding company, talks to finance offer that values Paris listed group at EUR3.7bn

Rothschild & Co., the Rothschild family’s investment bank, is set to go private. This move will bring EUR3.7bn into global finance, making it one of the most recognizable names in the industry.

Concordia, the Rothschilds family holding company, which owns 38.9% of the shares, and 47.5 percent of the voting rights. It said Monday that it was in discussions with investors and banks to finance an offer for Paris-listed group.

Rothschild & Co. has three divisions: global advice, wealth and asset management and merchant banking. Concordia stated that these businesses did not require capital from the equity markets, and it was more sensible for them to be privately owned, due to their long-term nature.

The statement said that each business is better evaluated on the basis their long-term performance than their short-term earnings.

This comes amid a global slump of dealmaking driven primarily by rising interest rates, economic uncertainty, and a period when frenzied activity was at its peak during the pandemic.

Advisors who rely on such activity to generate lucrative fees have been affected by the drop in mergers & acquisitions. This includes investment banks like Goldman Sachs which have reduced thousands of jobs and cut bonuses due to falling profits.

The Rothschild family’s plan to privatize their boutique business is contrary to the US trend of the past 20 years, when smaller advisories like Evercore and Lazard sought public listing in the US.

Rothschild’s roots go back over 200 years. However, the origins of Rothschild & Co are due to a 2012 merger of the former-separate French bank with the UK merchant bank NM Rothschild & Sons. David de Rothschild was the deal’s chairman at the time. It unites Rothschild’s corporate structure under one parent group, ending decades of cross-Channel rivalry.

The bank’s guard was changed four years ago when de Rothschild stood down and gave the reins to Alexandre. He became the seventh generation to run the bank. It has tried to diversify its core French and British advisory business , expanding in the US, where it has traditionally struggled, and into private equity.

Concordia will offer EUR48 per share. This is a 19% premium to Friday’s closing prices. The group is valued at EUR3.7 billion. This includes a dividend at EUR1.4 per share as well as an extraordinary distribution of EUR8 per shares if Concordia files an offer.

The Rothschild family concert enlarged, which includes Concordia holds 54.5 percent of the sharecapital and two-thirds the voting rights. Partners in the investment banking own approximately 5% of the sharecapital.

The shares of the company rose 16 percent to EUR46.85 during early trading in Paris Monday.

Rothschild & Co worked on some of Europe’s most significant deals over the last year. These included Volkswagen’s initial public offer of Porsche, Covea’s $9bn acquisition Partner Re by Covea, the nationalization of German energy group Uniper, and the combination satellite operators Eutelsat, OneWeb.

The third quarter 2022 revenue was EUR864mn, an increase of 30% year-on-year. Global advisory, the largest of its businesses, saw revenues rise 18% year-on-year to EUR547mn in the same period. According to the group, 2023 will be more difficult due to the geopolitical and macroeconomic environment.

Rothschild & Co owned EUR98.6bn in assets at the end of the third quarter.

Rothschild & Co stated that it had “taken notice of the proposed transaction” but had appointed Finexsi (a Paris-based financial advisory firm) as an independent expert in order to provide a fairness opinion.

Rothschild & Co is distinct from Edmond de Rothschild which is a Geneva-based private bank and asset management company. The two Rothschild factions disclosed that they had resolved a dispute about the family name in 2018. They also unwound cross shareholdings.