Rothschilds to enter US IPO market

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NM ROTHSCHILDS, the last of the blue-blooded City merchant banks, is preparing to enter the highly competitive US market for initial public offerings (IPOs) in a move which will take its battle with the big Wall Street firms to their home turf.

The firm is close to clearing the final regulatory hurdles needed to extend its existing 50:50 joint venture with Dutch banking giant ABN-Amro to the US. It is hoped to have the US venture in place before the end of this year. The existing European venture with ABN, which is now in its third year of operation, racked up 142 transactions raising $125bn last year.

The move will go someway towards tackling concern that the firm is hampered in its ability to compete with the so-called bulge bracket US firms by its lack of an equity distribution business in the US. Rothschilds Continuation Holdings, the Swiss co-ordinating company for NM Rothschilds group worldwide, yesterday reported a 23 per cent fall in profits to Swfr154.6m (pounds 63.6m) in the year to 31 March as a result of plunging gold and base metals prices and the collapse in Asian markets.

Sir Evelyn de Rothschild, the chairman, said: "These are creditable results in view of three major external factors affecting our performance - the appreciation of the Swiss franc against our major operating currencies, the slow pace of recovery in certain Asian economies and difficult conditions in the global resources sector."

The weak metals market had an impact not just on the trading side but also in the financing business, reflecting Rothschilds' traditionally strong position as a backer of the big mining houses.

Investment banking profits were up by 9 per cent reflecting a busy year during which Rothchilds advised on a raft of big deals including BT's $10bn joint venture with AT&T, National Grid's $3.2bn bid for New England Electric Systems, Seton Scholl's pounds 1.43bn merger with London International Group and the pounds 756m bid from France's Imetal for English China Clays.

However, overall operating income was flat at one billion Swiss francs.