Annual Report 2017

Rothschild & Co | Annual Report 2017

1. Overview

4. Financial statements

Management report

2. Business review

Rothschild Merchant Banking

Rothschild Merchant Banking is the investment arm of the Rothschild & Co Group

with global Assets under management of €7.5 billion across Corporate Private

Equity, Secondaries, Multi-Managers funds, Co-Investments, Direct Lending and

Credit Management. Our business is founded on a passion for investing, respect

for risk and culture of partnership.

€7.5bn

of Assets under

management

investment

professionals

strategies

Since its foundation in 2009, Rothschild Merchant Banking has grown its assets under management from c.€1.1 billion to

€7.5 billion currently through the launch of a series of funds in private equity and private debt. Our cohesive platform now

provides a comprehensive offering in Europe. Overall, the business employs 84 investment professionals across four offices

(London, Paris, Los Angeles and Luxembourg).

Our business culture is shaped by the Rothschild family’s

investing tradition of consistently generating long-term value

through an equal emphasis on both risk and return. This is

driven by three intertwined principles which define who we

are today:

•

Passion for investing:

The Rothschild family has an

investing history dating back more than a couple of

centuries – particularly for backing entrepreneurs who

the family felt were ahead of their times. At Rothschild

Merchant Banking we celebrate this legacy and passion

for investing and we expend significant energy in

ensuring that it remains at the heart of our culture.

•

Respect for risk:

Our investing ethos is centred on

delivering attractive risk-adjusted returns for our

investors. This approach is born out of a long-held

Rothschild & Co philosophy of wealth preservation

through active avoidance of capital impairment.

•

Culture of partnership:

We aim to form close, enduring

relationships with each of our stakeholders: our

investors, our managers, our people, our advisers

and financiers, and the broader environment in which

we operate. We invest significant amounts of capital

alongside our investors in each of our funds. Our

aspiration is to have a culture of partnership with a

shared sense of collective purpose in every important

decision we make.

We are committed to Environmental, Social and Governance

(ESG) matters and are signatory to the UN PRI (United

Nations Principles for Responsible Investment). In 2016,

Rothschild Merchant Banking has supported four NGOs and

social enterprises focusing on enhancing the prospects of

disadvantaged young people globally through a partnership

with Epic Foundation. Our partnership is based on individual

commitments from our staff with a matching scheme from

Rothschild & Co.

As at 31 December 2017, our assets under management

amounted to €7.5 billion split between €3.0 billion in private

equity and €4.5 billion in private debt across four strategies:

• Corporate private equity including Five Arrows Principal

Investments (FAPI)

• Secondaries, multi-manager funds and co-investments

including Five Arrows Secondary Opportunities (FASO),

Arolla and Rothschild Proprietary Investments (RPI)

• Direct Lending including Five Arrows Credit Solutions

(FACS) and Five Arrows Direct Lending (FADL)

• Credit Management (RCM) including Oberon and

Elsinore strategies as well as CLO funds.

Note: Assets under management comprise committed capital where a

managed fund is still in its investment period, and includes net asset value

after the investment period has expired.

Assets under management

(in billions of euros, as at 31 December)

2013

2014

2015

2016

2017

2.9

3.1

5.0

5.8

7.5

23%

20%

14%

12%

11%

89%

77%

80%

86%

88%

Group

Third party