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Rothschild & Co | Annual Report 2017
41
1. Overview
4. Financial statements
3.
Management report
2. Business review
Five Arrows Secondary Opportunities
The Five Arrows Secondary Opportunities (FASO) team
has developed a focus and expertise on European direct
secondaries in the small and mid-cap segment. FASO
purchases assets from sellers seeking liquidity, divesting
non-core assets as well as from fund managers rebalancing
portfolios. A specific know-how and network have been
developed over the years to tailor solutions to the most
complex secondary situations. It currently manages two
funds: FASO III, raised in 2012 and FASO IV, raised in
2016/2017.
With c.80% of secondary direct transactions across its
25 deals in FASO III and FASO IV, FASO continues to play a
leading role in the fragmented European small and mid-cap
market. Its widely diversified portfolio spans across the
whole of Europe and more than 13 sectors. In 2017, FASO
exited 30+ companies across its latest two funds. It also
completed four new deals, of which 90% were proprietary.
As at 31 December 2017, the net asset value of the Group’s
investment in FASO III and IV represented €42 million.
Multi-manager funds – Arolla
Arolla is Rothschild Merchant Banking’s global multi-
managers private equity platform. Arolla capitalises on
the Group’s private equity expertise and over-the-cycle
performance to invest globally across the private equity
asset class: primary fund investments, secondary
transactions and co-investments. This combination of
our flexibility and experience in multiple private equity
strategies gives us a truly distinct perspective.
Arolla successfully reached its final closing at €195 million
and is now 50% committed in 20 transactions across
Europe, the US and emerging markets. Arolla accelerated its
investment pace in 2017 with nine transactions completed
including six primary investments. During the year the fund
has also achieved a number of exits with 15 companies
sold successfully.
As at 31 December 2017, the net asset value of the Group’s
investment in Arolla represented €1 million.
Rothschild Proprietary Investments (RPI)
Rothschild Proprietary Investments has been the historical
investment arm of the Rothschild & Co Group, investing
on an opportunistic basis since the 1990s. From 2005
onwards, the RPI team has developed a strong co-investment
expertise, investing alongside a proprietary network of
international fund managers. It deployed over €500 million
of capital in more than 80 transactions, mainly in growth
capital and buy-out situations on a global basis, with a
focus on North America, Europe and emerging markets.
Rothschild Private Opportunities (RPO)
In conjunction with RPI balance sheet investment activity,
the RPI team also manages the Rothschild Private
Opportunities co-investment programme, an investment
club launched in 2013 as a joint initiative between
the Rothschild Merchant Banking and the Rothschild
Private Wealth divisions for the exclusive benefit of key
relationships of the Group. In 2017, RPO offered four
co-investment opportunities to its members.
In May 2017, RPI invested alongside Norland Capital
in DPR Software. DPR has designed a software suite
primarily focused on managing mortgage workflows
for banks, building societies and specialist lenders
in the UK.
In September 2017, RPI announced its exit from
Baozun generating a 33% IRR and 5.0x MOIC through
an IPO. In 2011, RPI had invested alongside Crescent
Point in Baozun, China’s leading e-commerce
outsourcer providing end-to-end solutions helping
companies establish their Chinese online presence.
Secondaries, multi-manager funds and co-investments