Rothschild Scion Takeover of Kurdish Iraq Oil Co.
21 09 2011
From Klosters to Kurdistan
Iraq-Erbil: Nat Rothschild’s world stretches from the coal mines of Indonesia via the aluminum smelters of Siberia to a legendary wine estate in France. And it just got much bigger.
Last week, Mr. Rothschild made a huge bet on the oil fields of Iraqi Kurdistan, one of the last great frontiers in oil exploration. His investment vehicle Vallares PLC said it will merge with Genel Energy International Ltd., a Turkish firm that pumps oil in Kurdistan, to create a $4 billion company.
The deal has raised some eyebrows in London. Critics say cash shells like Vallares provide a back door to the London Stock Exchange for murky emerging-market firms that might otherwise fail to comply with listing rules.
Yet when Vallares listed last June, it raised a whopping $2.18 billion—a mark of the faith Mr. Rothschild inspires in investors.
“These are very unusual structures because you get entrusted with people’s capital and get given the license to do what you want with it, on the basis of trust,” he says.
That trust is an asset Mr. Rothschild has leveraged into a complex network of business interests spanning the globe. The scion of a banking dynasty that expanded its wealth by cultivating relationships with influential people, he is equally at ease among Russian oligarchs, English aristocrats and New York socialites. Based in Klosters, Switzerland, he will spend more than 700 hours aboard his private jet this year.
But his impressive Rolodex has occasionally landed him in hot water. In 2008, he was at the center of a political scandal in the U.K. over his links to the Russian aluminum tycoon Oleg Deripaska. More recently, his ties to Seif el-Islam Gadhafi, son of the ousted Libyan dictator, have come under scrutiny.
These links haven’t done his business any harm. Ranked 67th in the Sunday Times’s list of the U.K.’s 1,000 richest people, with a fortune of £1 billion, he will become a lot richer thanks to the Vallares deal. For an initial outlay of $100 million, he and the other co-founders will get a 6.67% stake in the newly enlarged Genel. Mr. Rothschild’s share will be worth around $230 million.
But he insists he’s not in it for the money. “It’s incredibly enjoyable doing what we do—it’s as simple as that,” he says in an interview at his bankers, J.P.Morgan Cazenove, in the heart of London.
The youngest of four children and the only son of Jacob, Lord Rothschild, Nathaniel Victor James Rothschild was born in 1971 and educated at Eton, Britain’s most prestigious fee-paying school.
At Oxford he joined the Bullingdon Club, an exclusive dining society notorious for its rowdy parties, whose past members include the British prime minister, David Cameron. It’s not something he’s proud of.
“I certainly have no intention or desire to be a member of a club like that again,” he says. Since Oxford, he’s been teetotal.
He started off at investment bank Lazard. In 1996 Mr. Rothschild became a partner and later co-chairman of Atticus Capital LP, which came to epitomize a new breed of aggressive, globally connected hedge funds.
In 2002, he got to know the Russian billionaire Mr. Deripaska, at a board meeting of a Brazilian investment bank. The two are now friends and business partners: Mr. Rothschild is chairman of Mr. Deripaska’s En+ Group, which owns the controlling interest in aluminum giant UC Rusal. He is also an adviser to Rusal and was a cornerstone investor when it floated in Hong Kong last year.
It was his ties to Mr. Deripaska that triggered his first brush with scandal. In 2008, Mr Rothschild wrote to the U.K.’s Times newspaper accusing George Osborne, the Conservatives’ finance spokesman, of soliciting Mr. Deripaska for a political donation. Mr. Osborne denied the allegation.
His links to Seif Gadhafi also proved controversial. After getting to know him in the mid-2000s, he hosted him at a shooting weekend in the English countryside and at the family villa in Corfu.
Mr. Rothschild says the Libyan came across as a “very sensible guy,” and he was “shocked and surprised” to hear him on Libyan TV vowing to crush the uprising against his father. But he defends their relationship. “You forget that there was a great push to bring Libya in from the cold,” he says.
In his business career, too, it hasn’t all been plain sailing. In 2009, Atticus’s founder, Tim Barakett, shut down its flagship funds in the wake of the financial crisis. Mr. Rothschild went on to set up his own hedge fund, Attara Capital.
But he also shifted direction, launching Vallar, a cash shell to fund acquisitions in the mining industry. The choice of name was telling.
“Vallar was the name of the coin given to the first Roman foot soldier who successfully stormed an enemy encampment and survived,” he says.
In November, Vallar bought Indonesian coal assets for $3 billion and renamed itself Bumi PLC.
That success encouraged Mr. Rothschild to try his hand at oil. The spur was his friendship with Tony Hayward, the former chief executive of BP PLC, who was forced out over the Deepwater Horizon disaster.
“It was Tony’s availability and desire to do it that led us down the oil track,” he says.
The two got together this year to replicate the Vallar model with a new venture, Vallares, which floated in London in June. The day of the listing, Mr. Rothschild’s mother’s horse, Nathaniel, won the King Edward VII Stakes at Royal Ascot.
Critics have denounced the Vallares model as a way of getting companies with poor corporate governance records onto the London market. Last year, U.K. financial regulators fined Genel’s chief executive and co-founder, Mehmet Sepil, for insider dealing.
Mr. Rothschild rejects that criticism as “simplistic.”
“We’re not just providing a mechanism for the companies to go public and then sailing off into the sunset,” he says. “We are intimately involved in developing these businesses on behalf of our investors.”
To prove his point, he says Mr. Hayward is “going to have a lot of his wealth tied up” in the new company and will be its CEO, while another co-founder, Julian Metherell, will be chief financial officer. Mr. Rothschild himself will be a nonexecutive director. And the enlarged Genel’s board, chaired by a former deputy CEO of BP, Rodney Chase, will be “absolutely bulletproof.”
He remains proud of his achievement with Vallar and Vallares. “It’s a good thing to have on your résumé, that you’ve helped build two distinct companies” that will probably both find their way onto the FTSE-100 index. “We’ve done our investors proud,” he says.
As well as his business interests, Mr. Rothschild is also part-owner of Chateau Lafite Rothschild, the centuries-old estate whose wine has recently become the most expensive and sought-after in the world. The Bordeaux property has found a captive consumer base in Asia: In October last year, a case from the 2009 vintage sold at auction in Hong Kong for £43,000, smashing all records and redefining the price of yet-to-mature fine wine.
It wasn’t always the case. The chateau struggled in the 20th century, and some critics say it underperformed against its peers in the ’60s and ’70s. “It was a millstone round the Rothschild family’s neck for 100-plus years,” Mr. Rothschild says.
He doesn’t see it as an investment, he says, but as “something I’m lucky enough to be a custodian of during my own lifetime.” “Like one of those ghastly Patek Philippe adverts,” he jokes.
Mr. Rothschild has a busy fortnight ahead. His engagements include the final of the U.S. Open tennis tournament in Flushing Meadows, N.Y.; a board meeting of miner Barrick Gold Corp. in Toronto; breakfast with a “prominent Indian businessman” in London (he won’t say who); the annual Forstmann Little conference in Aspen, Colo.; and a meeting of Mr. Deripaska’s EN+ Group in Jersey, followed by a trip to the Prix de l’Arc de Triomphe horse race at Longchamp, France.
There’s a big incentive for that particular jaunt. “My mother’s horse is second-favorite for the Arc,” he says.
Source: wsj
21 09 2011
From Klosters to Kurdistan
Iraq-Erbil: Nat Rothschild’s world stretches from the coal mines of Indonesia via the aluminum smelters of Siberia to a legendary wine estate in France. And it just got much bigger.
Last week, Mr. Rothschild made a huge bet on the oil fields of Iraqi Kurdistan, one of the last great frontiers in oil exploration. His investment vehicle Vallares PLC said it will merge with Genel Energy International Ltd., a Turkish firm that pumps oil in Kurdistan, to create a $4 billion company.
The deal has raised some eyebrows in London. Critics say cash shells like Vallares provide a back door to the London Stock Exchange for murky emerging-market firms that might otherwise fail to comply with listing rules.
Yet when Vallares listed last June, it raised a whopping $2.18 billion—a mark of the faith Mr. Rothschild inspires in investors.
“These are very unusual structures because you get entrusted with people’s capital and get given the license to do what you want with it, on the basis of trust,” he says.
That trust is an asset Mr. Rothschild has leveraged into a complex network of business interests spanning the globe. The scion of a banking dynasty that expanded its wealth by cultivating relationships with influential people, he is equally at ease among Russian oligarchs, English aristocrats and New York socialites. Based in Klosters, Switzerland, he will spend more than 700 hours aboard his private jet this year.
But his impressive Rolodex has occasionally landed him in hot water. In 2008, he was at the center of a political scandal in the U.K. over his links to the Russian aluminum tycoon Oleg Deripaska. More recently, his ties to Seif el-Islam Gadhafi, son of the ousted Libyan dictator, have come under scrutiny.
These links haven’t done his business any harm. Ranked 67th in the Sunday Times’s list of the U.K.’s 1,000 richest people, with a fortune of £1 billion, he will become a lot richer thanks to the Vallares deal. For an initial outlay of $100 million, he and the other co-founders will get a 6.67% stake in the newly enlarged Genel. Mr. Rothschild’s share will be worth around $230 million.
But he insists he’s not in it for the money. “It’s incredibly enjoyable doing what we do—it’s as simple as that,” he says in an interview at his bankers, J.P.Morgan Cazenove, in the heart of London.
The youngest of four children and the only son of Jacob, Lord Rothschild, Nathaniel Victor James Rothschild was born in 1971 and educated at Eton, Britain’s most prestigious fee-paying school.
At Oxford he joined the Bullingdon Club, an exclusive dining society notorious for its rowdy parties, whose past members include the British prime minister, David Cameron. It’s not something he’s proud of.
“I certainly have no intention or desire to be a member of a club like that again,” he says. Since Oxford, he’s been teetotal.
He started off at investment bank Lazard. In 1996 Mr. Rothschild became a partner and later co-chairman of Atticus Capital LP, which came to epitomize a new breed of aggressive, globally connected hedge funds.
In 2002, he got to know the Russian billionaire Mr. Deripaska, at a board meeting of a Brazilian investment bank. The two are now friends and business partners: Mr. Rothschild is chairman of Mr. Deripaska’s En+ Group, which owns the controlling interest in aluminum giant UC Rusal. He is also an adviser to Rusal and was a cornerstone investor when it floated in Hong Kong last year.
It was his ties to Mr. Deripaska that triggered his first brush with scandal. In 2008, Mr Rothschild wrote to the U.K.’s Times newspaper accusing George Osborne, the Conservatives’ finance spokesman, of soliciting Mr. Deripaska for a political donation. Mr. Osborne denied the allegation.
His links to Seif Gadhafi also proved controversial. After getting to know him in the mid-2000s, he hosted him at a shooting weekend in the English countryside and at the family villa in Corfu.
Mr. Rothschild says the Libyan came across as a “very sensible guy,” and he was “shocked and surprised” to hear him on Libyan TV vowing to crush the uprising against his father. But he defends their relationship. “You forget that there was a great push to bring Libya in from the cold,” he says.
In his business career, too, it hasn’t all been plain sailing. In 2009, Atticus’s founder, Tim Barakett, shut down its flagship funds in the wake of the financial crisis. Mr. Rothschild went on to set up his own hedge fund, Attara Capital.
But he also shifted direction, launching Vallar, a cash shell to fund acquisitions in the mining industry. The choice of name was telling.
“Vallar was the name of the coin given to the first Roman foot soldier who successfully stormed an enemy encampment and survived,” he says.
In November, Vallar bought Indonesian coal assets for $3 billion and renamed itself Bumi PLC.
That success encouraged Mr. Rothschild to try his hand at oil. The spur was his friendship with Tony Hayward, the former chief executive of BP PLC, who was forced out over the Deepwater Horizon disaster.
“It was Tony’s availability and desire to do it that led us down the oil track,” he says.
The two got together this year to replicate the Vallar model with a new venture, Vallares, which floated in London in June. The day of the listing, Mr. Rothschild’s mother’s horse, Nathaniel, won the King Edward VII Stakes at Royal Ascot.
Critics have denounced the Vallares model as a way of getting companies with poor corporate governance records onto the London market. Last year, U.K. financial regulators fined Genel’s chief executive and co-founder, Mehmet Sepil, for insider dealing.
Mr. Rothschild rejects that criticism as “simplistic.”
“We’re not just providing a mechanism for the companies to go public and then sailing off into the sunset,” he says. “We are intimately involved in developing these businesses on behalf of our investors.”
To prove his point, he says Mr. Hayward is “going to have a lot of his wealth tied up” in the new company and will be its CEO, while another co-founder, Julian Metherell, will be chief financial officer. Mr. Rothschild himself will be a nonexecutive director. And the enlarged Genel’s board, chaired by a former deputy CEO of BP, Rodney Chase, will be “absolutely bulletproof.”
He remains proud of his achievement with Vallar and Vallares. “It’s a good thing to have on your résumé, that you’ve helped build two distinct companies” that will probably both find their way onto the FTSE-100 index. “We’ve done our investors proud,” he says.
As well as his business interests, Mr. Rothschild is also part-owner of Chateau Lafite Rothschild, the centuries-old estate whose wine has recently become the most expensive and sought-after in the world. The Bordeaux property has found a captive consumer base in Asia: In October last year, a case from the 2009 vintage sold at auction in Hong Kong for £43,000, smashing all records and redefining the price of yet-to-mature fine wine.
It wasn’t always the case. The chateau struggled in the 20th century, and some critics say it underperformed against its peers in the ’60s and ’70s. “It was a millstone round the Rothschild family’s neck for 100-plus years,” Mr. Rothschild says.
He doesn’t see it as an investment, he says, but as “something I’m lucky enough to be a custodian of during my own lifetime.” “Like one of those ghastly Patek Philippe adverts,” he jokes.
Mr. Rothschild has a busy fortnight ahead. His engagements include the final of the U.S. Open tennis tournament in Flushing Meadows, N.Y.; a board meeting of miner Barrick Gold Corp. in Toronto; breakfast with a “prominent Indian businessman” in London (he won’t say who); the annual Forstmann Little conference in Aspen, Colo.; and a meeting of Mr. Deripaska’s EN+ Group in Jersey, followed by a trip to the Prix de l’Arc de Triomphe horse race at Longchamp, France.
There’s a big incentive for that particular jaunt. “My mother’s horse is second-favorite for the Arc,” he says.
Source: wsj