Financial giant Rothschild expands credit management business

Family-owned financial adviser Rothschild is to take over Elgin Capital, in a move that will significantly increase the group’s leveraged buyout loans.

A spokesman for Rothschild confirmed the plans but refused to provide a timeline for the completion of the deal. He told CampdenFO that the acquisition will triple Rothschild’s leveraged loans under management, which will help the business take advantage of the associated higher returns.

Leveraged loans are those given to companies already in debt, making the loans more expensive to the borrower.

“Rothschild is buying Elgin Capital’s managed contracts and most of the staff,” the spokesman added. Elgin was founded in 2003 by Michael Clancy and Guillaume Bonpun, both of who will remain with the company.

The London-based group specialises in managing corporate credit risk in the European capital markets and deals with collateralised loan obligations.

Rothschild’s interest in its operations stems from the fact that CLOs, despite the high risk of default, typically pay better yields than normal loans, making them attractive to investors.

The Rothschild banking group, founded in 1811 in the City of London, has operations in 45 countries and is chaired by seventh-generation David de Rothschild.

The business appointed its first non-family chief executive in February last year, which saw Nigel Higgins taking over as head of the family-holding company.

The group had 2010 fiscal profits of £137.9 million (€157.65 million), up from £50.5 million the year before. Its assets at the end of 31 March last year stood at £3.23 billion (€3.69 billion).