Press release - Financial information
1st quarter 2019
Paris, 14 May 2019
Solid first quarter of 2019 driven by a strong activity in advisory
* Global Advisory: revenue up 12% to EUR292 million (Q1 2018: EUR262 million)
due to strong performance in our European M&A business. 5th globally by
revenue for the twelve months to March 2019
* Wealth & Asset Management: Strong net new assets and equity markets recovery
resulted in a robust growth in Assets under Management, up 7% from December
2018. Revenue was down 1% to EUR118 million (Q1 2018: EUR120 million)
reflecting negative interest on higher Euro central banks deposits
* Merchant Banking: revenue down 4% to EUR24 million (Q1 2018: EUR25 million)
but up 28% when compared to the average first quarter revenue for the
previous three years
* First quarter revenue was impacted :
- Negatively by the sale of the Trust business on 28 February 2019 (Q1 2019:
EUR5 million versus Q1 2018: EUR10 million)
- Positively by the currency translation effects of EUR8 million
In EUR million 2019 2018 % Var
Global Advisory 292.5 261.7 12%
Wealth & Asset Management 118.5 119.7 -1%
Merchant Banking 24.1 25.2 -4%
Other businesses 9.8 17.0 -42%
TOTAL before IFRS reconciliation 444.9 423.6 5%
IFRS Reconciliation (1.0) (3.6) -72%
Total Group revenue 443.9 420.0 6%
1. Business activities
1.1 Global Advisory
Our Global Advisory business focuses on providing advice in the areas of M&A
and strategic advisory and Financing Advisory encompassing Debt Advisory,
Restructuring and Equity Advisory.
Global Advisory revenue for the three months to March 2019 was EUR292.5
million, 12% higher than the same period in 2018 (EUR261.7 million),
principally due to a strong performance in our European M&A business. Our
ranking by financial advisory revenue in recent years has varied
quarter-on-quarter in the range between 4th and 6th; this position fluctuates
depending on quarterly revenue which can be volatile based on the timing of
transaction completions. For the twelve months to March 2019, we ranked 5th
globally by financial advisory revenue(1), compared to 6th for the twelve
months to December 2018.
Our M&A business remains well positioned, ranking 2nd globally by number of
completed transactions for the twelve months to March 2019(2). In Europe, we
continue to advise on more M&A transactions than any of our competitors, a
position we have held for more than a decade.
In Financing Advisory, we ranked 1st in Europe by number of completed
restructuring transactions for the twelve months to March 2019(3), and we
advised on more European equity assignments than any other independent
financial adviser(4) over the same period.
The quality of our people is our principal competitive advantage and we
continue to add to and strengthen our senior team. During the first quarter of
2019, we promoted 19 new Managing Directors (MDs) across the business,
demonstrating our focus on growing talent from within. In addition, we
recruited new MDs into our German and Asian businesses and a new Co-Head of
Shareholder Engagement to support our Investor Advisory practice.
Global Advisory advised the following clients on significant assignments
completed in the quarter:
* The Coca-Cola Company on its acquisition of Costa Coffee (US$5.1 billion,
United States and UK)
* CVC Capital Partners on its acquisition of 51.8% of Recordati (EUR3 billion,
* Enagas, with Blackstone and GIC, on its acquisition of 100% of class B shares
and voting rights in Tallgrass Energy (US$3.3 billion, Spain and United
* CityFibre on its refinancing and debt raise (GBR1.1 billion, UK)
* Faurecia on its acquisition of Clarion (EUR1.2 billion, France and Japan)
In addition, we continue to work on some of the largest and most complex
announced transactions globally, including acting as financial adviser to:
* RPC Group on its sale to Berry Global Group (GBR4.7 billion, UK and United
* Westinghouse (adviser to creditors) on its restructuring (US$4 billion,
* BTG on its recommended cash offer by Boston Scientific (GBR3.3 billion, UK
and United States)
* Sika on its acquisition of Parex from CVC Capital Partners (EUR2.2 billion,
Switzerland and France)
* Medacta Group's IPO on SIX Swiss Exchange (EUR561 million, Switzerland)(5)
(1) Company filings
(2) Refinitiv, completed transactions. Excludes accountancy firms
(5) Completed in Q2 2019
1.2 Wealth & Asset Management
Wealth & Asset Management is made up of our Wealth Management businesses in
France, Switzerland, UK, Belgium, Germany, Monaco and Italy and our Asset
Management activity in Europe. In addition we operate a small Asset Management
business in North America.
The sale of our worldwide wealth planning and trust services business was
completed in February 2019. Therefore all figures for 2018 and 2019 for Wealth
and Asset Management business have been restated. The Trust business has been
reclassified in "Other businesses" at Group level.
Revenue for the three months to March 2019 was EUR118.5 million (Q1 2018:
EUR119.7 million), down 1%. This mainly reflects negative interest on higher
Euro central banks deposits.
Assets under Management (AuM) increased by 7% (or EUR4.8 billion) to EUR69.6
billion as at 31 March 2019 (31 December 2018: EUR64.8 billion). The growth was
driven both by strong Net New Assets (NNA) as well as more favourable market
conditions, which recovered during the first quarter of 2019 following
difficult markets in the fourth quarter of 2018.
NNA in Wealth Management was EUR0.9 billion, representing a growth rate of 2%
of AUM with positive net inflows in all European countries; with a record
quarter level in France. Asset Management experienced very small outflows (less
than EUR30 million).
The table below presents the progress in Assets under Management.
In EUR billion 2019 2018
AuM opening (1 January) 64.8 67.3
Net new assets 0.9 1.1
Market and exchange rate 3.9 (1.9)
AuM closing (31 March) 69.6 66.5
1.3 Merchant Banking
Merchant Banking is the investment arm of Rothschild & Co which deploys the
firm's and third parties' capital in private equity and debt opportunities.
Revenue for the three months to March 2019 was EUR24.1 million (Q1 2018:
EUR25.2 million), down 4%. When compared to the average of the last three
years, first quarter revenue is up 28%.
Revenue comprises two main sources:
* Recurring revenue of EUR16.9 million includes management fees net of
placement fees (Q1 2018: EUR16.1 million),
* Investment performance related revenue of EUR7.2 million (Q1 2018: EUR9.1
- EUR2.9 million of carried interest (Q1 2018: EUR3.3 million),
- and EUR4.3 million of realised and unrealised investment gains and
dividends (Q1 2018: EUR5.8 million).
During the first quarter of 2019, Rothschild & Co's investments in the division
amounted to EUR19 million, mainly attributable to the Group's own investments
in funds managed by Merchant Banking (EUR17 million). Disposals and
distributions generated proceeds of EUR5 million of which EUR4 million was
distributed by FACS, our direct lending fund, focused on junior private debt.
During the first quarter of 2019, Merchant Banking closed its third European
corporate private equity fund, Five Arrows Principal Investments III ("FAPI
III"), at EUR1.26 billion and completed its first investment transaction in
April 2019. FAPI II, FAPI III's predecessor, completed an investment
transaction at the beginning of the quarter and, shortly after the end of it,
announced the signing of its last portfolio investment. In addition, the
US-based corporate private equity fund, FACP, finalised its third investment
bringing the invested amount to around 25% of the fund's committed capital
Merchant Banking's private debt funds have successfully continued to deploy
their capital with Five Arrows Credit Solutions now being fully invested and
Five Arrows Direct Lending (FADL) having invested around 80% of its committed
capital. FADL's deployment has been particularly strong given that it started
investing only two years ago; this reflects the dynamism of the team in finding
new investment opportunities in a rapidly growing market.
Assets under Management as at 31 March 2019 stood at EUR11.3 billion (31
December 2018: EUR11.1 billion), of which EUR1.0 billion has been committed by
Rothschild & Co. The increase of EUR0.2 billion mainly relates to the Oberon
credit management strategy, which invests in senior secured loans.
In Global Advisory, publicly available data indicates that the value of
announced global M&A activity has been broadly flat during the last twelve
months with European activity softening. Hence, whilst we believe the general
environment continues to be supportive for M&A, we remain alert to the signs of
a turning point in the cycle. At the moment, our visible pipeline of business
remains healthy and well diversified due to our broad market reach. We are
nevertheless cautious in assessing the outlook for the rest of the financial
year, particularly given the record year in 2018, notably in the second quarter
of last year.
Wealth and Asset Management has a solid base from which to grow and to continue
to deliver a strong net new assets in Wealth Management across all main
geographies. However, the macro economic factors are uncertain, resulting in
increased market volatility.
Merchant Banking expects to continue growing its Assets under Management in
line with its long term strategy and maintain a significant contribution to the
Group's results. The division will be focused on the deployment of recently
launched funds and on fund raising of successor funds. We continue to apply our
investment philosophy that is centred on cautious and disciplined capital
deployment decisions, focusing on attractive risk-reward opportunities with
appropriate downside protection features.
Whilst 2018 was a very strong year, we anticipate 2019 to be more challenging
due to the increased uncertainty surrounding the macro environment. We will
continue to focus on our strategy of growing our three businesses and improving
the synergies between them, while, in the event of a decline in market
conditions, remaining ever vigilant to control our cost base.
* 16 May 2019 Annual General Meeting
* 22 May 2019 Dividend payment date
* 17 September 2019 Half year results 2019
* 13 November 2019 Third quarter information 2019
* 10 March 2020 Full year results 2019
With a team of c.3,500 talented financial services specialists on the ground in
over 40 countries across the world, our integrated global network of trusted
professionals provide in-depth market intelligence and effective long-term
solutions for our clients in Global Advisory, Wealth & Asset Management, and
Merchant Banking. Rothschild & Co is family-controlled and independent and has
been at the centre of the world's financial markets for over 200 years.
Rothschild & Co is a French partnership limited by shares (société en
commandite par actions) listed on Euronext in Paris, Compartment A with a share
capital of EUR155,135,552. Paris trade and companies registry 302 519 228.
Registered office: 23 bis avenue de Messine, 75008 Paris, France.