Awards for Excellence 2019
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Advisory league tables typically rank investment banks either by dollar volume of transactions worked on or by fee revenues.
What if they ranked advisers by number of deals instead?
Rothschild & Co would shoot up the tables. In the 12 months prior to Euromoney’s submission deadline for this year’s awards for excellence, Rothschild ranked third by number of M&A transactions behind global leaders Goldman Sachs and JPMorgan.
It advised on 336 deals, far ahead of its great rivals among the independent investment banks, Lazard and Evercore.
Partly that’s a late-cycle phenomenon: there have been more small and medium-sized M&A deals than really big transactions over our awards period. And that helps Rothschild to shine.
In past years, Euromoney has hesitated to name it the world’s best independent investment bank because Rothschild is much more of a European business than Evercore and Lazard, which have always been much stronger in the US.
But Rothschild has been building up there too.
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Philippe Le |
“We now have approximately 40 managing directors in North America, based in six offices. Since 2014, more than half our existing managing directors have been hired or promoted, and we have opened three new offices – Los Angeles, Chicago and Palo Alto,” says Philippe Le Bourgeois, partner at Rothschild & Co.
That still leaves it a smaller presence than its two great rivals in the biggest market for investment banking, but Rothschild is not done yet.
“As a global business with our roots in Europe, the North American market is important to us and we continue to plan for further expansion,” Le Bourgeois says.
In the last year, Rothschild has worked on some sizeable, classic US public M&A deals, advising KapStone on its $4.9 billion sale to WestRock Corporation and Pinnacle Foods on its $10.9 billion sale to Conagra Brands.
Le Bourgeois says: “Pinnacle Foods is an important mid-sized group that we have come to know through our US expansion. We now have four managing directors in North America focused on the consumer sector, and this deal shows our relevance in the sector.”
The transaction was the largest US consumer deal to be completed in 2018, creating a powerhouse in frozen foods.
Le Bourgeois says: “Another good example of our sector-based recruitment strategy is the opening of our Chicago office, where we have hired four managing directors, including our head of the Chicago office and Midwest region who has a particular expertise in paper and packaging, and a close local relationship in Chicago with KapStone. This resulted in our being involved as lead adviser in this important transaction.”
Having capability in the US is essential to serve large European companies. Rothschild advised long-standing French client Atos on its $3.4 billion cash acquisition of Michigan-based Syntel, showing its understanding of the IT sector.
The firm advises on a large number of cross-border transactions.
It was sole adviser to Coca-Cola on its $5.1 billion acquisition of Costa Coffee from Whitbread.
“Through the various assignments we advised on for the Coca-Cola bottling system around the world, we developed a good understanding of the Coca-Cola group strategy,” says Le Bourgeois. “With our strength in Europe and in global consumer, Coca-Cola group turned to us for financial advice when Whitbread decided to crystallize the value of Costa Coffee.”
We helped Accor achieve its goal of crystalizing some value by effectively devising a new company for investors – Philippe Le Bourgeois
Another highlight transaction was acting as lead financial adviser to AccorHotels on the sell down of a 58% stake in a portfolio of hotel properties, AccorInvest, to a consortium of private and public investors including the Public Investment Fund, GIC, Crédit Agricole Assurances, Colony NorthStar (now Colony Capital) and Amundi among others.
“We helped Accor achieve its goal of crystalizing some value by effectively devising a new company for investors. We raised €2.5 billion of equity from the investors, who took a 65% stake in the company,” says Le Bourgeois.
It’s a non-listed spin-off. The AccorInvest portfolio was structured for long-term capital providers that will receive an attractive dividend but may have lower capital appreciation expectations than public-market investors or private-equity firms. It shows Rothschild is at the cutting edge of the new markets in private capital.
“These days, when we talk to a private-equity sponsor about an exit, we no longer talk only about a dual track IPO or trade sale process. We also talk about possible recapitalization and about bringing in long-term capital providers – which may be insurance companies or pension funds as well as sovereign wealth funds and family offices – as minority investors to de-risk a sponsor’s exposure while allowing it to retain upside,” Le Bourgeois says.
Rothschild is a regular lead adviser on debt and equity capital markets. It advised Sasol, the South African based chemical and energy company, on a $2.25 billon dual-tranche offering of senior notes that extended its debt maturity profile and diversified its funding sources.
Rothschild coordinated the selection of bookrunners and negotiated key terms and covenants and managed the bookrunner group in a deal that sought to reposition Sasol as a global rather than an emerging-market company.
