(AOF) – Rothschild & Co’s third quarter 2022 revenues reached 864 million euros, up 30%. They were driven by Merchant Banking (investment and private debt), whose revenues amounted to 146 million euros, up 207%. The third quarter of 2022 includes revaluations of certain investments held by private equity funds following the signing of disposal agreements over the period.
In financial advice, they are up 18% to 547 million euros.
In Private Banking and Asset Management, revenues increased by 9% to 164 million euros. Assets under management decreased by 5% since the start of 2022 to €98.6 billion due to net inflows in Europe (€3 billion) and the acquisition of a Management Advisor of Heritage (3 billion euros) neutralized by a negative market effect.
“Subject to exogenous circumstances, we expect our three businesses to continue to post strong performances during the fourth quarter of 2022, although below 2021 levels,” the financial group said.
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Key points
– Independent financial advisory group created more than two centuries ago;
– Revenues of €2.9 billion, split between advisory for 66%, private banking and asset management for 25% and private equity and private debt (€11.3 billion in assets under management) for 9 %;
– Business model based on three pillars: consulting: strong international positions – 6
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world rank by revenue and 4
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by the number of transactions concluded – with a global approach between mergers – acquisitions, strategic advice and debt restructuring / private banking and asset management (€104 billion): mainly in Europe / private equity and debt private (€18.3 billion in assets under management);
– Track record of shareholder return and long-term revenue growth;
– Strengthening of the family concert in the capital, controlled at 54.1% in shares and 68.2% in voting rights, David de Rothschild chairing the 15-member supervisory board and Alexandre de Rothschild the management board;
– Solid financial position with €3.3 billion in equity, a high Tier 1 of 20.3% and liquid assets at 51% of total assets.
Challenges
– Specific strategy for each activity: consulting: strengthen the leading position in Europe, increase market share in the United States, accelerate growth in the rest of the world and generate more synergies between activities (10 to 20% of entries of capital in asset management comes from consulting and private equity) / asset management: accelerate growth in the 3 core business countries (France, Switzerland and the United Kingdom), reduce costs and increase the margin around 80%, generate more synergies n continue the integration of the former Martin Maurel / capital investment: increase recurring revenues, strengthen the positioning as a specialist in midcaps in Europe and the United States;
– Innovation strategy centered on the security of information systems;
– Environmental strategy for carbon neutrality by 2030: 70% reduction in CO2 emissions vs 2018 through the transfer to carbon elimination techniques and 91 of electricity from renewable sources / partnerships in biodiversity and reforestation / expansion of the range of “green” funds;
– Integration of acquisitions – the British Livingstone, specialized in advising medium-sized companies, the Swiss bank Pâris bertrand, the French fintech Scalens – and establishments – in private management in Spain.
Challenges
– Monitoring of the net book value per share, up at the end of June to €45.19;
– Strong disparity between the margins, that of private equity being much higher;
– Impact of inflation: maintenance of more difficult market conditions;
– After a 2% increase in revenues and a 28% decline in net income on 1
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semester, 2022 expectations: financial advisory: continuation of the activity levels of 1
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semester but slowdown in the pipeline / private banking and asset management: cautious for the rest of the year but revenues supported by recent acquisitions in France and Switzerland and by the rise in rates / merchant banking: continued revenue growth recurring and value creation;
– Share buyback program and interim dividend of €3.79 for 2021.