Chanel owners among French families supporting Rothschild delisting

The Rothschilds have recruited some of Europe’s wealthiest families, including the billionaire brothers behind luxury chain Chanel, to help privatize the Franco-British investment bank in a deal that will take one of the biggest names in global finance to €3.7 billion appreciates.

Concordia, the Rothschild family holding company that controls the bank, said on Monday that four industrial dynasties will join them in a buyout from minority investors and become long-term shareholders in a deal that includes global consulting, commercial banking and wealth and wealth management.

Among the new major investors, the Rothschilds have tapped into the Peugeot family, best known for its connections to the car company of the same name; Mousse Partners, which manages investments for the Wertheimer brothers, who own Chanel; and Hannah Rothschild, a writer and filmmaker who is part of the British strand of the Rothschild family.

French Dassault family, with investments ranging from newspapers to aeronautics, and Italian entrepreneur Giammaria Giuliani will also attend. The Dassaults and Giuliani were already investors in Rothschild alongside Concordia.

François Pérol, managing partner of Rothschild & Co, told the Financial Times that “the idea for the family is to run the group entirely privately and to do it with investors with a similar mindset, who have a family-focused and long-term conceptual perspective.”

The push to privatize Rothschild & Co is the most high-profile move to date by Alexandre de Rothschild, a seventh-generation member who has run the bank since succeeding his father David de Rothschild at the helm five years ago.

The younger de Rothschild said in an interview last week that the group had “reached the limit and full potential of listing” and that its DNA was “much better suited to being a private company”.

However, the move has raised some questions about the valuation. Excluding additional dividends to be paid as part of the offer, raising the offer price to €48 per share, the price would be €38.6, below where they were trading just prior to the announcement of the offer.

To fund the deal, Concordia will be relying, at least in part, on bank loans, and it said Monday it had letters of commitment from two lenders. One of the banks is Natixis, said a person familiar with the matter. Natixis declined to comment.

The industrial investors would each end up receiving around 5 percent of Rothschild and would be tied to the shares for at least eight years.

Rothschild’s 100 or so partners will double their stake in the company to 10 percent as part of the buyout, while Concordia and the so-called Concert of Family Shareholders will hold 60 percent, up from 54.5 percent now.

Details of the Take Private deal were revealed as Rothschild & Co announced its financial results for 2022, in which the group’s total revenues rose 1 percent to €2.96 billion.

Full-year sales in its largest business, Global Advisory, fell 4 percent to 1.84 billion euros and profit before tax fell 12 percent to 372 million euros. This follows a record year for the global advisory business in 2021 and reflects a broader slump in deals as rising interest rates and economic uncertainty brought a period of frenetic activity at the height of the pandemic to an abrupt end.

“We expect our businesses to continue to perform well, albeit below 2022 levels, coupled with a slowdown in mergers and acquisitions in a very uncertain macroeconomic climate,” Pérol said. “It’s always difficult to see more than six months ahead in this sector, but the first semester will be weaker.”

The slowdown in mergers and acquisitions has prompted investment banks like Goldman Sachs to shed thousands of jobs and slash bonuses as profits fall.

Pérol said Rothschild & Co will not cut staff numbers, although the group may recruit less or stop hiring, and that it has leeway to adjust variable pay. “We’re trying to avoid a stop-and-go situation, that’s not what we do,” he said.

The wealth and asset management division of Rothschild & Co, which is worth around 100 billion euros, increased its income by a fifth to 700 million euros last year and recorded a jump in profits by a third to 154 million euros. Merchant Banking, its smallest division, increased revenue 2 percent to 406 million euros and profit before tax fell 6.5 percent to 273 million euros.