Thursday, October 29, 2009
The Man Who May Become the Richest Rothschild
By LANDON THOMAS Jr.
Happy or unhappy, each family generation often resembles another, and that is especially true when it comes to the Rothschilds.
More than 200 years after Mayer Amschel Rothschild founded the family dynasty that offered discreet counsel and investment wisdom to kings, queens, emperors and industrial titans, his 35-year-old direct descendant, Nathaniel, has emerged as a kingmaker in his own right and an investor who some say may become the richest Rothschild of them all.
In five short years, the man in line to be the fifth Baron Rothschild is close to becoming a billionaire through a web of private equity investments in Ukraine, Eastern Europe and most significant, his partnership stake in Atticus Capital, the fast-growing $14 billion hedge fund.
The ascent of Mr. Rothschild is a vivid illustration of how the still glittering, if somewhat faded, prestige and wealth of Europe’s most storied banking family has been reinvigorated from bold bets in this era’s new-money investment vehicles.
Like his forebears, he prefers that his influence remain unseen.
Mr. Rothschild is a principal adviser to Oleg Deripaska, one of the richest oligarchs in Russia and the owner of the aluminum giant Rusal, which recently merged with two other companies to create the world’s largest aluminum company. Mr. Rothschild received no public credit despite having played a crucial role in getting the deal done.
And like a true Rothschild he has a taste for the good life: as an avid skier, his principal residence is in Klosters, Switzerland, and he uses his Gulfstream jet to shuttle among his other homes in Paris, Moscow, London, New York and Greece.
But he is also a man of contradictions: he dates supermodels and actresses, sits on an advisory board of the Brookings Institution, a research organization in Washington, and serves his guests the best wines from the Rothschild vineyards, which he himself will not drink.
He professes to have a penchant for privacy and would not be interviewed for this article, yet he allowed his lushly renovated town house in Greenwich Village to be featured in Men’s Vogue magazine. Despite his reputation as the most gregarious of men and the increasingly public nature of his life and career, he comes across as a pinched, reticent man in the few public photographs of him — as if he was shying away from his renown.
The burden of being a Rothschild can be a heavy one. In 1996, one of Mr. Rothschild’s cousins, Amschel, having been asked to fill a leadership position in the family bank in London, hanged himself in a hotel bathroom at the age of 41.
Four years later Raphael de Rothschild, also a cousin, died on a sidewalk in Manhattan at the age of 23 from a heroin overdose.
In the early 1990s, some thought that Mr. Rothschild might also buckle under the weight of the family name. He appeared to be an aimless society playboy with a taste for the slack, unchallenged lifestyle so often embraced by the sons and daughters of Europe’s rich families.
“This is the story of Prince Hal turning into Henry IV,” said Charles G. Phillips, who supervised Mr. Rothschild during his time at the investment firm Gleacher & Company. “He is one of the few sons of great men who has enhanced the family stature and created his own wealth.”
The family legacy was daunting at first for Mr. Rothschild, whose ancestor Nathan Mayer Rothschild helped finance Britain’s victory at Waterloo and whose father, Jacob, split from the family bank in 1980 to begin his own successful career as an investor.
So much so that until he started work as a 25-year-old investment analyst at Gleacher in 1995, Mr. Rothschild avoided it altogether.
He was the life of parties in New York, Paris and London, and in 1995 he eloped to the Dominican Republic with Annabelle Neilson, a free-spirited London socialite with a reputation for dancing on dinner tables in her high heels.
In 1995, when Mr. Rothschild showed up for work at Gleacher, he was still trying to find his way. He was a recent graduate of Oxford, where he had been a member of the exclusive Bullingdon Club, a notorious drinking society known for its rite of wrecking the restaurant furnishings after raucous dinner parties.
With his shabby dress, limited financial experience and energetic social life, he did not make much of a first impression, according to Eric Gleacher, chairman and founder of the bank who is a close friend of Jacob Rothschild, known as Lord Rothschild.
“He was kind of floundering,” Mr. Gleacher said. “I figured he had some big boots to fill.”
While he undertook the drudgery of trainee investment banking work, Mr. Rothschild kept his eyes open for an opportunity more in tune with his growing ambition. In the spring of 1995 he found just that when he left the Gleacher offices in Midtown Manhattan to smoke a quick cigarette a few floors above.
Puffing away in an anteroom, he ran into Timothy R. Barakett, then a 29-year-old investor who was doing the rounds trying to raise funds for Atticus, his new hedge fund. Learning that Mr. Barakett was starting up a fund, he asked for a job. Mr. Barakett turned him down.
But the two men stayed in touch, and in the fall of 1996, Mr. Barakett took Mr. Rothschild on as a minority partner in the nascent fund, then $90 million in assets, and gave him the title of director of business development with a mandate to tap his considerable connections and family connections for new capital.
Mr. Rothschild took to the new opportunity with renewed vigor. He stopped drinking, reached a divorce agreement and devoted his energies to promoting the investment talents of Mr. Barakett.
The fund’s extraordinary performance — since inception it is has grown on average 30 percent a year — made Mr. Rothschild’s job an easy one. Still, some early investors like Peter Munk, the founder and chairman of Barrick Gold, were skeptical at first.
In 2001, he agreed to meet with Mr. Rothschild at the request of Mr. Rothschild’s father, a longtime friend.
“He did not carry the halo of being the future of the family,” Mr. Munk recalled of their brief meeting in the lobby of Claridge’s, the hotel in London. “I wanted to get rid of the boy.”
When Mr. Rothschild said he was a partner in a hedge fund, Mr. Munk had his doubts, assuming that the fund was just a family hedge fund.
“He was indignant,” Mr. Munk recalled. “ ‘My family did not put in one cent,’ he said.”
Mr. Munk would become an investor and a happy one at that. Now, Mr. Rothschild sits on Barrick’s advisory board and is an investor along with Mr. Munk in the TriGranit Development Corporation, a real estate company that invests in Hungary and Eastern Europe and which may go public this year, representing another big payoff.
“This kid is special,” he said. “It’s back to when they were ruling the world.”
With his mix of Old World politesse, a racy appreciation for fast times and the brute force of his accumulating wealth, Mr. Rothschild has become friend and adviser to many — including Russian billionaires, Indian steel magnates and a long list of people who have helped him out during his ascent.
“I will literally get a BlackBerry from him in Siberia asking me how I am doing,” said Glenn Dubin of Highbridge Capital, who was an early investor in Atticus.
To a large extent, the source of Mr. Rothschild’s renewed wealth and influence is tied to the explosive growth of Atticus, where over the last three years assets have surged to $14 billion from $2 billion. (Last year, the fund was up 50 percent before fees, an astonishing return given its considerable size.) In 2005, Mr. Rothschild was paid $80 million in compensation and made more than that last year, according to people with knowledge of his pay arrangement at Atticus.
Now co-chairman, he spends less time raising money for the fund, which is for the most part closed to new investors. But his influence in opening doors for Mr. Barakett, especially in Europe, has been considerable. His Oxford connections came in handy when he pried David Slager, also an Oxford alumnus, away from Goldman Sachs’s risk arbitrage desk in London. Mr. Slager is now Mr. Barakett’s top investing deputy and a vice chairman at the fund.
Mr. Barakett and Mr. Rothschild remain close and speak every day.
“He has had an incredible evolution, and he has done it on his own,” Mr. Barakett said. “It’s not about family connections. He has a knack for identifying talented people and interesting investments.”
By all accounts his relationship with his father is a complicated one. He sits on the board of RIT Capital Partners, Lord Rothschild’s investment trust, and he has never been shy about using the family name to open doors. Still, people who know him say that he is consumed by a furious ambition to live up to, if not surpass, the reputation and doings of his father.
“Being Jacob’s son was difficult for him,” Mr. Dubin said. “But he has matured and is comfortable with himself.”
But, while his rapidly won riches may give him pleasure, it will take more than a billion dollars to live up to the wider social and charitable responsibilities that fall upon a Rothschild baron.
“The family is accomplished in so many different ways,” said Jeffrey T. Leeds, a private equity investor who knows the Rothschilds well. “Nat knows that he would not be fulfilling his responsibilities if he were simply someone who amassed great wealth.”
Now his investments are done through his personal merchant bank called JNR, an entity that is controlled solely by him, in spite of the initials, which stand for Jacob and Nathaniel Rothschild.
It is through JNR, based in London and run by a small crew of investment bankers, that Mr. Rothschild has made his latest investments, prospecting for oil in Ukraine and buying a stake in Diligence, a corporate intelligence firm.
“There is a lot of power behind him, and like all the Rothschilds they use their power with discretion,” said Guy Wyser-Pratte, who has invested with Mr. Rothschild. “I expect him to uphold the family tradition.”
Correction: March 15, 2007
A picture credit was omitted on the front page of Business Day on Friday with an article about the investment career of Nathaniel Rothschild, of the dynastic Rothschild family. The photograph of Mr. Rothschild was by Jack Guez/Agence France-Presse — Getty Images. Also, the article carried incorrect information in a quotation from Charles G. Phillips, who likened Mr. Rothschild to Prince Hal in the Shakespearean play “Henry IV.” Prince Hal became Henry V — not Henry IV, as Mr. Phillips said.