‘Rockchild’ deal signals US shift
1 June 2012
, by Daniel Schäfer (Financial Times)http://www.ft.com/intl/cms/s/0/3546939a-ac03-11e1-923a-00144feabdc0.htmlIn the hall of Lord Jacob Rothschild’s Victorian office at the Waddesdon Dairy in Buckinghamshire, a cow plastered with one dollar notes greets the visitor
The glass-framed sculpture by British artist Justine Smith not only provides an example of Lord Rothschild’s passion and philanthropic support for art.
Most recently, it has come to symbolise the 76-year-old’s investment strategy.
“I think the United States has an edge. To have a strong presence in the US will be extremely important,” the chairman of listed investment trust RIT Capital Partners says in his first interview since the announcement of a tie-up with the Rockefellers this week.
As part of the deal, RIT Capital Partners will take a 37 per cent stake in US wealth and asset manager Rockefeller Financial Services and the two groups will co-operate on acquisitions and third-party investment funds.
What has been dubbed as the “Rockchild” union brings him together with fellow family patriarch David Rockefeller and creates something that his ancestors in the 19th century did not manage to establish: a strong foothold in the US.
“They [the US] have been extremely fortunate in the discovery of these huge resources of shale oil and gas
and they could well become the new Saudi Arabia for the next 50 years,” the banker and art collector says at the 19th century Waddesdon estate where he works every Friday to look after his philanthropic projects.
By contrast, his views on Europe are rather bleak. “We all know that Europe is going through a very tough period in the next five to ten years,” he says.
This is reflected in the investment focus of RIT Capital Partners, the vehicle in which he owns an 18.3% stake.
The trust has moved from an already minimal exposure to the euro to a short position in the troubled continent’s currency in the past financial year which ended this March, according to the annual report published yesterday.
This strategy could not prevent a 3.1 per cent fall in the trust’s net asset value in the past financial year that slightly underperformed its benchmark indices.
Despite this, a capital cushion of almost £1.7bn and very little debt has allowed Lord Rothschild to embark on a global expansion strategy at a time when others were licking their wounds.
“We have become a less UK-oriented company and less parochial,” says the father of three daughters and of hedge fund manager Nat Rothschild.
In China, RIT Capital Partners has just announced the first closing of a private equity fund established with Creat Group, the Chinese investment conglomerate.
And in Europe, a recent investment partnership with the Franco-Swiss bank Edmond de Rothschild will strengthen the family ties and allow both sides to interlink on investments and third-party funds.
The move demonstrates how Lord Rothschild has become more interested in recent years in reuniting a banking dynasty that started two centuries ago when Frankfurt-based Mayer Amschel Rothschild sent his sons to Paris, London, Naples and Vienna to create what became known as “the world’s banker”.
Five years ago, he re-established contact with Sir Evelyn Rothschild, his cousin and former head of NM Rothschild, the UK-based investment bank.
They fell out with each other in the 1980s when Sir Evelyn took over at the helm of NM Rothschild, prompting his cousin to start his own ventures.
“I do regret that the parting of the ways was not an amicable one. But the way it turned out has been a happy and more interesting one both for Evelyn and me,” he says.
He says Sir Evelyn invited him to dinner just this week. “We have an extremely good and close relationship, Evelyn and I.”
Despite his age, the energetic Lord Rothschild makes every impression that he wants to carry on as chairman of his investment vehicle for many years.
But he also has a strong line-up of successor candidates from within his family, such as the “brilliant entrepreneur” Nat as well as his “extremely able” daughter Hanna and his nephew James who are non-exececutive directors of J. Rothschild Capital Management, RIT’s management company..
Lord Rothschild welcomes a move by his Paris-based relative Baron David de Rothschild to bring together NM Rothschild and the dynasty’s French banking group under one roof.
A reunion of all of these sprawling family ventures could be a – albeit distant – possibility.
“You have a lot of Rothschilds around and the world changes fast so you never know,” the family patriarch says.