Man in the News: Nat Rothschild
By Christopher Thompson and Lina Saigol
Published: November 19 2010 22:40 | Last updated: November 19 2010 22:40
Communicating in staccato after two days without sleep, earlier this week Nat Rothschild stepped off a plane from Singapore to announce the latest chapter in his family’s voluminous annals of financial exploits. Vallar, the mineral hungry cash-shell he floated in July, is to be no more, he said. From its ashes will rise Bumi Plc – a London-quoted “Indonesian natural resources giant”.
The deal’s geopolitical nous and sense of daring had the mercantilist flavour of the epoch when the Rothschild family made its name and fortune. It is to be a confluence of business dynasties from the east and west. His partner is Indra Bakrie, brother of Aburizal, the billionaire pater familias and Indonesia’s most powerful businessman. Just as Rothschild family agents in 19th century Cape Town and New York once constituted a vanguard of New World development, so Bumi’s provision of coal to Chinese and Indian furnaces will drive Asia’s modern industrial revolutions.
Mr Rothschild, the unmarried 39-year-old heir to the title of Baron Rothschild, is a prominent mover in Britain’s establishment circles. As a friend to politicians such as Lord Mandelson, the former Labour minister, and tycoons such as the Russian aluminium magnate Oleg Deripaska, he is accustomed to being in the public eye. Two days after the deal he sat in a drawing room at London’s neoclassical Spencer Club, surrounded by portraits of 18th and 19th century moguls. He won’t rest until he makes “a success” out of Bumi, he said. “I don’t want them [shareholders] to make 50 per cent or 100 per cent – I want them to make two or three times their money.”
Such is the meaning of accomplishment at the House of Rothschild. Two hundred years ago his rags-to-riches ancestor Nathan founded the eponymous family bank in London, via a Frankfurt ghetto and a Mancunian textile business. His image of the buccaneering financier has been associated with the family ever since, something that finds its purest expression in that abiding myth of Waterloo. As legend has it, Nathan – on receiving news of Napoleon’s defeat before the British government – caused market panic by short selling stocks before buying them back for a song.
This week’s deal saw Vallar acquire stakes in Bumi Resources and Berau, Indonesia’s first and fifth biggest coal producers respectively, for $3bn in cash and shares. Mr Rothschild insisted that Bumi will soon be bigger than FTSE 100 miner Xstrata, the giant competitor which also started in coal. “By 2014 Bumi will be the biggest exporter of thermal coal to China, producing 140 million tonnes per annum,” he said.
For all his establishment easy-going charm he is renowned among friends and rivals for his ambition. It can be summed up by one word: money. “He is obsessed with wanting to create more and more wealth and prove that he is an even better financier than his father Jacob,” said one banker who has worked with Mr Rothschild.
His network of billionaire investors means he has access to funds that counterparts can only dream of. “Nat is one of the few financiers who can fund a big deal without having to call the Blackrocks and Fidelitys of this world. They want to share in the upside of investing with him” the banker added.
Peter Munk, chairman of Barrick Gold, the world’s largest gold producer, first met Mr Rothschild in his mid-20s. His father was reportedly concerned about his son’s partying and asked Mr Munk to have a chat. “It began as a favour and yet I ended becoming an investor, a follower of his career,” said Mr Munk, who recently appointed Mr Rothschild to his own board. “He is the most mobile businessman I know. In resources success depends on international contacts – whether or not someone picks up the phone in Rio, Mumbai, Qatar and Beijing. Would you believe anyone not picking up the phone for Nat Rothschild?”
After studying history at Oxford he joined Lazard Brothers, a bank that rivals the Rothschild enterprises in New York, Paris and London. In the mid-1990s he set out to establish his own name when – after giving up alcohol for Diet Coke – he joined Atticus, the hedge fund, as co-chairman. At its height in 2007 it had $23bn of assets under control and was among the world’s biggest. He is still involved in Atticus’s Europe fund – the last of three standing after the financial crisis.
Vallar’s initial public offer, in which it raised £707m despite having no assets, showed the trust Mr Rothschild can command among big business people. Wealth also means he can quickly find the best managers to handle the day-to-day operations of his investments. James Campbell, Vallar’s chief executive, was Anglo American’s head of coal. Its chairman, Julian Horn-Smith, is Vodafone’s former chief executive.
Such a nexus of money and power can have explosive results, as Mr Rothschild found out two years ago, when, after a holiday in Greece, he became angry with his old Oxford chum George Osborne, now the UK chancellor and then in opposition, for breaching the privacy of a summer party. In retaliation he wrote a letter to The Times alleging Mr Osborne had tried to solicit a political donation from Mr Deripaska while on the Russian’s yacht.
The Bumi deal was done four weeks from the day Mr Rothschild and Mr Bakrie first met at the Four Seasons hotel in Los Angeles. According to someone familiar with the matter, it was predicated “upon a handshake” – a gentleman’s agreement in a parallel world of oligarchs.
Some fear he may come to rue the deal. He is now a minority shareholder, with Mr Bakrie and Rosan Roeslani, an Indonesian private equity tycoon, possessing the largest single stakes in Bumi. Mr Bakrie, according to those who know him, is used to getting his own way. He also faces allegations of tax evasion – which he denies – and has a company debt that has been worrying investors on the Jakarta bourse. One local analyst said the deal “was financially engineered” to shift Mr Bakrie’s assets abroad and seek international capital with the Rothschild brand on board.
Time will tell if haste was indeed a virtue. For now Mr Rothschild’s focus is, as ever, singular: “As we’ve seen recently things can go terribly wrong, terribly quickly,” he says. “So you have to make hay whilst the sun shines.”
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