ROTHSCHILD (EPA:ROTH) - Press release - Financial information 1st quarter 2021
Transparency directive : regulatory news
Click here to download pdf version
Press release - Financial information
1st quarter 2021
Paris, 11 May 2021
Record quarterly revenues driven by strong market conditions across all three
* Global Advisory: record quarterly revenue, up 47% to EUR394.9 million (Q1
2020: EUR269.1 million) reflecting continued strong momentum and activity
levels across our whole business
* Wealth and Asset Management: Assets under Management (AuM) up 7% to EUR83.6
billion (31 December 2020: EUR78.1 billion) thanks to record Net New Assets
(NNA) in Wealth Management (EUR2.4 billion) and positive market performance.
Revenues up 3% to EUR134.3 million (Q1 2020: EUR130.8 million) driven by an
increase in management fees in connection with the strong growth in AuM
* Merchant Banking: record quarterly revenue, up 400% to EUR103.4 million, (Q1
2020: EUR20.7 million) as a result of significant realised and unrealised
investment gains, combined with further significant growth in recurring
In EUR million 2021 2020 % Var
Global Advisory 394.9 269.1 47%
Wealth and Asset Management 134.3 130.8 3%
Merchant Banking 103.4 20.7 400%
Other businesses 5.0 3.1 61%
TOTAL before IFRS
reconciliation 637.6 423.7 50%
IFRS Reconciliation (1.4) (7.3) (81)%
Total Group revenue 636.2 416.4 53%
First quarter revenue impacted negatively by currency translation effects of
1. Business review
1.1 Global Advisory
Our Global Advisory business focuses on providing advice in the areas of
Strategic Advisory and M&A, Financing Advisory encompassing Debt Advisory,
Restructuring and Equity Advisory, as well as Investor Advisory where we advise
clients around engaging with shareholders on a variety of topics including
activism, sustainability and governance.
Global Advisory delivered record quarterly revenue of EUR394.9 million for the
three months to March 2021, up 47% from the same stage last year (Q1 2020:
EUR269.1 million), reflecting continued strong momentum and activity levels
across our whole business. We continue to maintain a strong competitive
position. For the last twelve months to March 2021, we ranked 6th globally by
financial advisory revenue(1).
Our M&A revenue for the three months to March 2021 was EUR281.3 million, up 33%
(Q1 2020: EUR211.9 million), based on increased deal activity and more larger
fees. We ranked 4th globally by number of completed transactions for the twelve
months to March 2021(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
Financing Advisory revenue for the three months to March 2021 was EUR113.6
million, representing a twofold increase compared to the same stage last year
(Q1 2020: EUR57.2 million). We ranked 3rd in Europe by number of completed
restructuring transactions for the twelve months to March 2021(2), and we
advised on more European equity assignments than any other independent
financial adviser over the same period(3).
Global Advisory advised the following clients on significant assignments that
completed in the quarter:
* Bankia on its merger with CaixaBank (EUR17 billion, Spain)
* Chesapeake on its Chapter 11 restructuring (US$10.8 billion, United States)
* Alstom on its acquisition of Bombardier Transportation and cornerstone
investment from CDPQ (EUR7.5 billion, France and Canada)
* Walmart on its sale of Asda to Issa Brothers and TDR Capital (£6.8 billion,
United States and United Kingdom)
* Just Eat Takeaway on its dual tranche convertible bond issuance and
concurrent delta placing (EUR1.1 billion, United Kingdom)
In addition, we continue to work on some of the largest and most complex
announced transactions globally, including acting as financial adviser to:
* Suez on its recommended tender offer from Veolia (EUR26 billion, France)
* SIA on its combination with Nexi (EUR20 billion, Italy)
* Coca-Cola European Partners on its recommended offer for Coca-Cola Amatil
from public shareholders and The Coca-Cola Company (US$8.4 billion, UK,
Australia and United States)
* Nordic Aviation Capital on its restructuring (US$5.9 billion, United
* Grupo Aeroméxico on its chapter 11 restructuring (US$3.3 billion, Mexico)
(1) Source: Company filings announced to 10 May 2021. Unannounced competitor
results are based on twelve months to December 2020
(2) Source: Refinitiv
(3) Source: Dealogic
1.2 Wealth and Asset Management
Wealth and 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.
Wealth and Asset Management delivered record first quarter revenue of EUR134.3
million, up 3% (Q1 2020:
EUR130.8 million). The revenue progression has been driven mainly by an
increase in management fees as a consequence of the strong growth in Assets
under Management (AuM) enjoyed in 2020, and despite the continuing impact of
lower interest rates on revenue.
AuM increased by 7% (or EUR5.5 billion) to EUR83.6 billion as at 31 March 2020
(31 December 2020: EUR78.1 billion). The growth was driven by strong Net New
Assets (NNA) as well as more favourable market conditions. This was partly
offset by the loss of EUR0.4 billion arising from the sale of our alternative
fund of funds business.
Wealth Management recorded a high level of NNA of EUR2.4 billion. Each Wealth
Management business in Europe saw positive net inflows.
Asset Management recorded a net outflow of EUR0.5 billion, largely due to North
America (EUR0.6 billion), following poor investment performance in 2020.
Performance year to date has been much stronger.
The ongoing COVID-19 pandemic continues to affect the business, with access to
our offices and travel both being restricted. Despite this, as is reflected in
the NNA figures, levels of business activity remain high.
The progress of the acquisition of Banque Pâris Bertrand, announced in
December 2020, is good and we remain confident that we will complete in the
The table below shows the development of our AuM.
In EUR billion 31/03/2021 31/12/2020 31/03/2020
AuM opening 78.1 71.4 76.0
of which Wealth Management 55.8 51.3 50.5
of which AM Europe 14.1 13.9 15.4
of which AM US 8.2 6.2 10.1
Net new assets 1.9 1.4 0.6
of which Wealth Management 2.4 0.6 1.3
of which AM Europe 0.1 (0.2) (0.1)
of which AM US (0.6) 1.0 (0.6)
Market and exchange rate 3.6 5.3 (9.9)
AuM closing 83.6 78.1 66.7
of which Wealth Management 60.9 55.8 46.6
of which AM Europe 14.5 14.1 13.0
of which AM US 8.2 8.2 7.1
% var / AuM opening 7%
1.3 Merchant Banking
Merchant Banking is the investment arm of Rothschild & Co managing capital for
the firm and third parties in private equity and private debt.
Merchant Banking delivered record quarterly revenue of EUR103.4 million, up
400% (Q1 2020: EUR20.7 million) thanks to significant realised gains on
investment disposals, material unrealised value accretion across the entire
portfolio and continued growth in recurring revenue. When compared to the
average of the last three years' first quarters, Q1 2021 revenue was up 343%.
Assets under Management as at 31 March 2021 were EUR16.2 billion, up 4% versus
31 December 2020 (EUR15.7 billion), of which Rothschild & Co's share was EUR1.4
billion (31 December 2020: EUR1.3 billion).
The table below illustrates the progression in revenue.
In EUR million Q1 2021 Q1 2020 Var % Var
Recurring revenue 31.0 27.2 3.8 14%
revenue (1) 72.4 (6.5) 78.9 n.m.
of which carried interest 25.8 (2.2) 28.0 n.m.
of which realised and
gains and dividends 46.6 (4.3) 50.9 n.m.
Total revenue 103.4 20.7 82.7 400%
% recurring /
total revenue 30% 131%
(1) Investment performance revenue comprises EUR50 million, out of a total of
EUR72.4 million, related to investment income earned following valuation
uplifts achieved through realisations from the private equity portfolio.
The strong revenue increase for the three months to March 2021 is the
combination of two positive effects:
* An increase in recurring revenue of 14% (+EUR3.8 million) compared to Q1
2020, in line with the steady growth trajectory achieved as a result of the
consistently expanding AuM base; and
* a significant contribution from investment performance revenue of EUR72.4
million, representing a positive variance of EUR78.9 million compared to Q1
2020. This performance was mainly driven by:
o valuation uplifts achieved through successful realisations from the
private equity portfolio (in particular the disposals of IAD, Opus2 and
White Clark Group, as detailed below), and
o positive mark-to-market movements in the Group's Credit Management
positions of EUR1.4 million (compared to an unrealised loss of EUR8.5
million in Q1 2020).
The investment performance revenue generated in the three months to March 2021
represents a strong validation of our robust investment approach and confirms
our guidance during 2020 that lower valuation uplifts were due to the transient
impact of the COVID-19 pandemic on our portfolio.
The resilience of the industry sectors we focus on (Healthcare, Data & Software
and Technology-Enabled Business Services), together with the high quality of
our assets and our effective portfolio value creation initiatives, were the
main drivers behind the successful realisations completed in Q1 2021.
The alignment of interests between the Group and our third-party investors
continues to represent a key differentiator for Merchant Banking. In Q1 2021:
* Rothschild & Co's investments in the division's products totalled EUR48.3
million, of which EUR38.5 million was in private equity and EUR9.8 million in
* Disposals and distributions generated proceeds of EUR72.9 million for the
Group, of which EUR49.7 million was from private equity and EUR23.2 million
from private debt.
Investment activities and business development
During the first quarter, Merchant Banking continued to raise new capital for
its various strategies, resulting in a further increase in its AuM and
completed several transactions across its private equity and private debt
* Five Arrows Principal Investments I (FAPI I), our 1st generation European
private equity fund, completed a final liquidity event for investors by selling
its remaining assets to a Continuation Fund. Those investors who chose to
remain invested will continue to benefit from the future value creation of the
* Five Arrows Principal Investments II (FAPI II), our 2nd generation European
private equity fund, completed three successful disposals:
o IAD, the leading digital network of independent real estate agents in
Europe, was sold for a MOIC1 of 10.0x;
o Opus2, the global leader in legal dispute management software and services,
was sold for a MOIC of 3.1x; and
o White Clark Group, the leading automotive finance software vendor, was sold
for a MOIC of 2.0x.
* Five Arrows Secondary Opportunities V (FASO V), our 3rd generation
secondaries fund, completed two further investments and has now committed 50%
of its capital across nine transactions in Europe and the US.
* Five Arrows Minority Investments (FAMI) fully exited its minority
co-investment position in ECI Software, receiving total proceeds of EUR3.2
million and generating an investment income of EUR1.2 million.
* Five Arrows Growth Capital I (FAGC I), our 1st generation European small cap
private equity fund, held its fourth closing, securing additional commitments
of EUR136.5 million.
* Five Arrows Credit Solutions (FACS), our 1st generation mid-market direct
lending fund, completed three successful exits during the quarter:
- Photobox, a pan-European e-commerce platform, was refinanced, generating a
10.9% gross IRR;
- Biogroup, a leading European provider of clinical laboratory testing
services, was exited, delivering a 14.4% gross IRR; and
- A-Plan, a leading UK insurance broker, was sold, yielding an 11.7% gross
* Five Arrows Direct Lending (FADL) and Five Arrows Debt Partners III (FADP
III), our 2nd and 3rd generation direct lending funds, also both exited their
positions in Biogroup, generating gross IRRs of 9.0% and 30.3% respectively.
* FADP III completed its sixth investment, providing unitranche financing to
Exemplar, a UK provider of high- acuity residential care services, principally
to adults with long-term degenerative conditions. In addition, FADP III secured
commitments of EUR252.0 million during the quarter. A further closing was held
in April and the strategy is on track to achieve its target size of EUR1.25
* The Credit Management business, investing in senior secured loans and high
yield bonds, continued to expand its AuM in the first quarter, securing a new
managed account (initial committed capital of EUR55 million and increasing the
size of its two most recent CLO warehouses in Europe (+EUR74 million) and the
US (+US$50 million). Credit Management AuM in CLO vehicles has now reached
(1) MOIC stands for Multiple On Invested Capital
In Global Advisory, announced global M&A activity for the first quarter of 2021
has been particularly strong. This trend is reflected in our visible pipeline
of business which is well diversified and significantly ahead of previous years
at this stage. We are therefore optimistic regarding the prospective
performance of our business for 2021, but of course we remain alert to respond
to a range of market conditions in the year ahead.
In Wealth and Asset Management, the outlook for the year is positive, although
there are some modest non- recurrent revenues in the exceptionally strong first
quarter figures. Our strong new business and the higher than expected AuM at
the end of the first quarter mean the business is well set for the remainder of
the year provided markets continue to be supportive.
In Merchant Banking, we expect to continue to grow our recurring revenue base
as we complete the fundraisings for our currently open funds, launch new
initiatives, and deploy capital across all our strategies. In addition,
notwithstanding the ongoing uncertainties related to the COVID-19 pandemic, we
expect our investments to continue to show resilience and fulfil their value
creation potential, which will generate further investment performance related
revenue for the Group. We are confident that our fundamental investing
principles, centred around capital preservation and providing attractive
risk-adjusted returns from our chosen sectors, represent a strong foundation
for the ongoing development of Merchant Banking.
The current macro environment continues to benefit our three core businesses
which have produced record performances in the first quarter. The clear
strategies of each business line have meant that we are weathering the crisis
and, if the current momentum and market conditions persist, allow us to be
optimistic for a strong performance for the rest of the year.
* 20 May 2021: Annual General Meeting
* 15 September 2021: Half-year 2021
* 9 November 2021: Third quarter 2021 - Financial information
For further information:
Investor Relations - Marie-Laure Becquart
Media Relations - Caroline Nico
Media Contact: DGM - Olivier Labesse
About Rothschild & Co
Rothschild & Co is family-controlled and independent and has been at the centre
of the world's financial markets for over 200 years. With a team of c.3,600
talented financial services specialists on the ground in over 40 countries,
Rothschild & Co's integrated global network of trusted professionals provides
in-depth market intelligence and effective long-term solutions for our clients
in Global Advisory, Wealth and Asset Management, and Merchant Banking.
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 EUR155,375,024. Paris trade and companies registry 302 519 228.
Registered office: 23 bis avenue de Messine, 75008 Paris, France.