Rothschild Heir Faces Revenue Drop at Core of M&A Boutique

(Bloomberg) -- Alexandre de Rothschild, heir apparent at Rothschild & Co., has already installed a new top management team. His next job is to ensure the investment bank revives revenue at its key global advisory business.

Revenue from advising and financing clients on deals fell 20 percent to 262 million euros ($311 million) in the first quarter, the Paris-based bank said late on Tuesday. That figure was hurt by the stronger euro and a decline in the value of completed M&A deals globally, it said. Deal conditions remain positive and the bank says it’s “cautiously optimistic” for revenue this year.

Alexandre, 37, becomes the seventh generation of the family in charge of the bank in a long planned succession that sees his father David de Rothschild, 75, become supervisory board chairman on Thursday. The bank has been reorganizing at the top in preparation for the handover, re-hiring BPCE Chairman Francois Perol for a key role as a managing partner and co-Chairman of the bank’s group executive committee with Robert Leitao.

To offset the volatility of M&A fees, Rothschild has increased its exposure to private-banking businesses. Rothschild last year finalized the purchase of Cie. Financiere Martin Maurel, a Marseille-based private bank, a move designed to grow its activities with wealthy clients across French regions. It’s also expanding its advisory footprint in North America, opening an office in San Francisco and this month hiring two UBS Group AG bankers for Chicago.

Rothschild shares fell about 1 percent in Paris to 30.15 euros and are down about 1.3 percent this year.

Completed Deals

The bank said it’s ranked first globally by the number of completed transactions in the first quarter, advising on Total SA’s acquisition of A.P Moller-Maersk’s oil and gas unit and Zodiac Aerospace on its combination with Safran SA. Other major advisory clients this year include Walmart Inc. in a proposed merger of its Asda supermarkets with J Sainsbury Plc, though that deal has yet to close.

Higher revenue in wealth management and merchant banking, which includes private equity, partly offset the decline in advisory income in the first three months. Total revenue fell 14 percent to 420 million euros.

Alexandre joined the family company a decade ago to focus on the merchant-banking division after working at other financial firms. Under his father, the bank changed its corporate structure, combining its French and U.K. units to form Paris Orleans SA, a Paris-traded company that was renamed Rothschild & Co. in 2015. More recently, the lender has sought to expand in the U.S.

This year, Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan & Chase Co. are leading the U.S. M&A league table, according to data compiled by Bloomberg. American banks are also topping the European advisory league for 2018, while Rothschild ranks No. 6, compared with no. 7 the previous year.

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