Rothschild Five Arrows Long Term - London
Any insights on recent investments / culture / career progression within the Long Term Private Equity (FALT) team at Rothschild Five Arrows in London?
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Presume this is for FAPI?
Have worked with them when I was on sell side, they are very intelligent, bit intense but have made good investments in tech and pharma services. Hard to say on comp but I’d expect similar to say Bridgepoint / Montagu etc.
Retention seems good. Seen people get from IM to Principal. Maybe less so from Analyst to IM.
The Long Term strategy is different from the flagship FAPI fund which is in its fourth iteration at the moment and has been very successful historically. Returns in mature funds are top quartile and they have never lost money on a deal so far. Why is this important? The IC for the Long Term strategy will be very similar if not entirely the same as the IC for the flagship fund. The two managing partners of FAPI are very strong and have spent a lot of time trying to build a franchise with the US strategy they launched more than 5 years ago and the small cap ‘back to the roots’ strategy they launched 2 years ago. Neither of these two has been as successful as FAPI flagship but we should give them the benefit of the doubt. Their investment strategy across all funds is revolving around barriers to entry, downside protection, capital preservation… they are not afraid to pay high multiples for high quality assets and for the last 10 years with zero interest rates this has worked well.
This long term strategy is something like Hg Saturn. I suspect they will invest in some of the assets that they have owned already. There is an increasing trend of GPs selling assets to themselves. FAPI has done a few of those and so far it has worked out. The long term fund will do 4-5 deals in total and hold them for longer than the usual 5yr hold. I believe they are planning to raise around 1bn EUR for it and were almost there. Believe carry is also structured differently than the usual 20% over 8% so something to definitely look into.
Overall FAPI as an institution is very strong. People that work there that I have met have all been super smart. The lead London Partner is super ambitious and wants to turn FAPI in one of the best funds in Europe.
All valid comments. What do you think about succession? Seems like the firm is being led by 1-2 key guys.
I know a couple of people who have interned there and interviewed there myself.
The poster above described it correctly, the point about interest rates is very relevant. They won't shy away from bidding 45x on mature businesses. Whether or not this will work going forward, and how easy their portfolio (majority tech) will be to exit is TBD.
They are not very operational as a fund, but they don't need to be as the businesses they buy are normally very high quality. They spend a lot of time thinking about TAM, attach rate, cross-sell, up-sell, churn (gross, net, logo, dollar) etc.
I don't buy the comment above about being one of the best funds in Europe, because I don't think there are "best" funds. Different funds offer different investment styles. If you want to do a certain kind of investing they are very good, if you want to make money in declining markets with shitty businesses then I wouldn't say they are very good at that.
how many intakes? how's the interview process?
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Are you in process for FAPI or FALT?
Are they open to consultants in general (McK)?
for the internship or ft analyst?
I mean as PE exit (FT).
Updated views on FALT?
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