The son may eclipse the father

By Alex Brummer, July 7, 2011

The Honourable Nat Rothschild, scion of the most famous family in European banking, is proving a surprise package.

After a misspent youth, which saw him branded as a playboy and worse, he could yet become the richest Rothschild of all through a series of spectacular investments in natural resources. Like his father Lord (Jacob) Rothschild, Nat is making his own way outside of the purview of his French cousin Baron David de Rothschild, who currently heads the NM Rothschild bank.

The family famously split in 1980 when Nat's father Jacob left the bank over differences with his cousin Evelyn. He went on to create his own financial empire based around the Rothschild Investment Trust (RIT).

Eton and Oxford-educated Nat has also trodden his own path. He too is a substantial shareholder in RIT and is a 35 per cent shareholder in Five Arrows, a Rothschild company, which also has a holding in RIT. After stints at investment bankers Lazard in London and merger specialists Gleacher in New York, Nat Rothschild struck out on his own as founder investor in Atticus Capital, a New York and London-based hedge fund. He had a good run in the build up to the great panic and great recession of 2007-09. But the main fund was dissolved in 2009 with Nat becoming co-chairman of its successor. In recent months however, Rothschild has attracted attention because of his strong interest in natural resources.

Last year Nat Rothschild launched Vallar on the London Stock Exchange (LSE) with the aim of investing in metals, coal and iron ore assets.

The Rothschild name together with the allure of Nat's business partner James Campbell, a veteran of the South African miner Anglo-American, was enough to ensure a successful £707 million round of fund-raising. After a relatively slow start, it was announced that the company would be investing $3 billion in two Indonesian thermal coal companies with the goal of becoming a big exporter of coal to Asia's emerging markets. Nat's business activities were already proving as profitable as those of his father. The prospectus for his latest venture notes: 'Rothschild's hedge fund and advisory activities, and business interests, on which he spent the majority of his time between 1966 and 2011, have generated in excess of $850 million.'

It is this track record of making money for investors which allowed him to launch a second natural resources fund on the LSE last month. Vallares, which aims to invest in oil resources. was founded together with Tony Hayward, the former chief executive of BP and the man who was forced to resign from Britain's oil giant after the Gulf of Mexico spill of 2010.

Hayward's greatest strength of BP has been its ability to explore and find new oil. It was a pioneer in deep-water drilling in the Gulf of Mexico (even though it got it so wrong). Hayward looks set to net at least £14 million from the Vallares venture.

The former BP boss has financed his participation in the new venture with loans from Credit Suisse. The prospectus warned investors that Hayward may still face charges in the US arising from the Deepwater Horizon spill. But with a Rothschild name on the packet and a former Goldman Sachs banker Julian Metherell on the board, investors do not seem to have been deterred at all.

Nat Rothschild has been involved in his fair share of disputes. Most notably in October 2008. Rothschild wrote to The Times suggesting that his former Oxford colleague George Osborne, now the Chancellor of the Exchequer, together with Lord (Andrew) Feldman had sought to solicit a potentially illegal donation from the Russian oligarch Oleg Deripaska during a visit to Corfu. The row left Rothschild and Osborne bruised but does not appear to have halted their progress. Nat Rothschild has shown an aptitude for making money which for many people who watched his earlier playboy life is unexpected. He has skilfully climbed on the natural-resources bandwagon, first profiting handsomely from the Glencore floatation, on which he made an estimated £25 million, and now through his own exploration investments.

However, given that his family remains a big benefactor to Israel, through the Hanadiv Foundation, which is currently paying for a new library for the Hebrew University (having already financed the Knesset and Supreme Court buildings) there is reason to keep a close eye on his developing portfolio of interests.

Alex Brummer is City Editor of the Daily Mail

Last updated: 9:49am, July 7 2011