Merchant Banking

Presentation to analysts and investors

March 2021

Public

Merchant Banking

A powerful and cohesive multi-strategy platform across the capital structure

176 employees

24 nationalities

DiscountPrivate Equity €6.8bn

Corporate private equity, secondaries,

multi-managers funds, co-investments

DiscountPrivate Debt

Direct lending, credit management

€8.9bn

€15.7bnassets under

management

€1.3bnfrom the Rothschild & Co Group

5 officesParis, London, Luxembourg, New York, Los Angeles

2

Public

Mid-market focus through directs, secondaries, co-investments and multi-managers

Private Equity offering

Multi-Strategies (FAMS)Corporate Private Equity

Mid-market

buyout

Mid-cap direct

SecondariesCo-investments

Multi-managers

& FoF platform

Mid-market

buyout

FAPIFive Arrows Principal

Investments

FACPFive Arrows Capital

Partners

FASOFive Arrows Secondary

Opportunities

FAMIFive Arrows Minority

Investments

FAPEPFive Arrows Private

Equity Programme

Small-cap

buyout

FAGCFive Arrows Growth

Capital

24 investment professionals38 investment professionals

€3.8bn €3.0bn

3

Gross Multiple: 2.25x – 2.75x

Gross IRR: 18% – 20%Target:

Gross Multiple: 1.50x – 1.70x

Gross IRR: 14% – 20%Target:

Public

Credit solutions across the capital structure for mid-cap and large companies

Private Debt offering

Direct Lending Credit Management

FACSFive Arrows

Credit Solutions

Oberon& managed accounts

Elsinore& managed accounts

GLIFive Arrows Global

Loan Investments

CLOmanagement

FADLFive Arrows

Direct Lending

Debt financing solutions to privately-

owned businesses across the

European mid-market

Unlevered senior

secured credits

Senior,

subordinated and

CLO credits

CLO Equity CLO vehicles

FADP IIIFive Arrows

Debt Partners III

23 investment professionals12 investment professionals

€1.7bn €7.2bn

4

Junior: 12%

Unitranche: 8%Target Gross IRR:

Senior: 12%

CLO Equity: 14-16%Target Gross IRR:

Public

Asset selection is based on stringent criteria centred on risk-adjusted returns

How our investment algorithm applies across all strategies

5

Flexible cost base

Low working

capital

Barriers to Entry

Concentrated

portfolios

Highly diversified

portfolios

Corporate PE Direct Lending Secondaries Credit Management

Portfolio diversification

“Mission critical” products

Organic growthROIC

Dominant franchises

Installed customer base

“Asset-lite”Free cash flow

Infrastructure / supply chain

Sales channelsRegulation

Industry

selection

Target

selection

Operational

constraints

Financial

features

Public6

Deep and continuous review of risk encompasses all

aspects of our business

Organisational design

Deal origination

Investment process

Asset selection

Portfolio value-add

Exit

Concentrated

portfolios

Highly diversified

portfolios

Corporate PE Direct Lending Secondaries Credit Management

Portfolio diversification

7

Public

Energy & utilities

631

Industrial equipment

296

Real estate992

Travel & hospitality239

Logistics204

Retail193

Consumer durables

141

Business services

484

Consumer non-durables

218

Media89

Tech services192

Healthcare263

Pharma & biotech135

Software440

Telecom150

Majority of capital deployed is in sectors least impacted by the

pandemic

Extent of disruption2

Debt-service

coverage ratio1

0x

8x

4x

LESS MORE

Our portfolios sector positioning

1Calculated as (EBITDA April 2019-March202) / (current debt April 2019 + interest expense April 2019-March202), sector average2Qualitative assessment of disruption from COVID-19, geopolitical tensions, economic inequality, and other factors3Global PE AUM

Source: Pitchbook, Preqin, McKinsey analysis

Circle size = Private equity AUM3 (March 2020, in $bn)

Debt-service coverage ratio and disruption by sector

Highly vulnerable

Slightly vulnerable

Least vulnerable

Public

The future of private markets

Private vs. public assets: a systemic switch?

Secular growth drivers

• Superior returns vs public equities

• Better resilience of private equity over economic cycles

• Retrenchment of banks driving growth in private debt

• Increasing allocations towards alternatives

Unprecedented flow of capital into

private markets

8

How Is Merchant

Banking performing

vis-à-vis these

favourable market

dynamics?

Public

554

767

356

0

100

200

300

400

500

600

700

800

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Preqin Private Equity Preqin Buyout

S&P 500

Focus on secular growth drivers

9

PE performance outstrips public equities across cycles European leveraged loan funds continues to rise

Allocations to PE and PD demonstrate strong tailwinds Consistent growth in AuM over the last 10 years

-9%

S&P 500 annualised 7% return vs.

11% for buyout funds since 2000

-17%

-14%

-21%

-12%

-12%

-9%

-7%

-20%Ind

ex

Retu

rn

6%10%10%

4% 2% 3%6%

11%13%13%

3%

-2%

1%

-1%-5%-3% 0%

0% 0% 1% 2%

4%

76%

42%

82%

(6%)

14%

34%

54%

74%

94%

1999 2003 2007 2011 2015 2019

Annual European Bank LendingGrowthFund Investors Europe

Private Equity

Private Debt

Real Estate

Infrastructure

Hedge Funds

+30%

+26%

-17%

+16%

+16%

Net change in asset

allocation share1

2,8

1,6

0,3

7,9

4,5

0,8

Total AuM Private Equity AuM Private Debt AuM

2009

2019

+11.0% +11.0% +12.3%‘09-’19

CAGR:

Source: S&P LCD News, European CommissionSource: Preqin Index, Private Equity and Buyout vs. S&P 500 (Rebased to 100 as of 31 December 2000)

Source: Preqin1Time horizon: Next 12 months from June 2020 vs prior 12 months

Source: Preqin Investor Outlook: Alternative Assets H2 2020

US

$ t

rilli

on

Public

1,352

100 283

0

400

800

1,200

1,600

2009 2012 2014 2016 2017 2018 2019

R&Co AuM Total market AuM

Merchant Banking’s growth rate was almost 5x faster than the overall market

Outpacing market growth

10

1.0

CAGR 09-19

+11.0%

Index using AuM level

in 2009 as 100

2.7 3.1 5.8 8.3 11.1 14.0R&Co AuM (€ bln)

Overall market AuM (US$ trn) 2.8 3.7 4.4 5.1 5.8 6.7 7.9

+29.7%

13.5x

initial AuM

2.8x

initial AuM

Sources: Preqin, R&Co company data

R&Co growth

5x faster than

the market

Public

Evolution of AuM in 2020

11

AuM growth primarily driven by CLOs launched and new capital raised in private equity, multi-

strategy and direct lending funds

3.6 3.8

2.6 3.0

1.2

1.7

6.5

7.2

14.0

+ 2.6 + 0.2

-1.1

15.7

AuM - 31/12/19 New capital Valuation Uplift Distributions AuM - 31/12/20

Corp.Private Equity Secondaries / Co-investments Direct Lending R&Co CM

€ b

illio

n

Public

Development of the fundraising mix

12

Amount raised is well balanced across all four MB strategies with institutions providing a growing

share of capital…which is highly scalable

Cumulative amount raised by investor type (€ bn) Cumulative amount raised by strategy (€ bn)

Institutions

CAGR

+45%

Note

R&Co includes staff investments

Amounts exclude CLOs and Oberon USA

1,7

3,6

7,0

11,1

2014 2016 2018 2020

R&Co HNW Family Office Institutions

1,7

3,6

7,0

11,1

2014 2016 2018 2020

Corporate Private Equity Credit Management

Multi Strategies Direct Lending

Public

Merchant Banking revenue model

Recurring revenue

(Management

Fees)37%

Performance fees

(Carried

Interest)14%

Investment gains49%

2015-2017 average 2018-2020 average

13

The increased contribution of management fees to total revenue has driven a progressive shift

towards a more recurring revenue pattern for the business

Recurring revenue (Management Fees)

53%

Performance fees (Carried Interest)

17%

Investment gains30%

Public

931

44 51 61 7091

1142

2931

36

48 6

(4)

38

61

53

93 69

58

28

2009A 2012A 2015A 2016A 2017A 2018A 2019A 2020A

Gains (realised and unrealised) Carried interest Recurring revenue

Merchant Banking revenue model

14

Lower investment performance related revenue in 2020 was partly offset by a continued strong

growth of recurring revenue

Recurring mgmt

fees growing

steadily with

investment

performance upside

€ m

illio

n As MB grows more

diversified carried

interest becomes

more stable and

recurring

Investment income

upside linked to

Group investments

in MB funds

• Quality of the portfolio, generating

€34m uplift even in 2020

• Expect investment revenue

rebound in 2021

5 69 107 133 185 175 197 148

82 120 102 111 57not disclosedProfit before

tax (€m)

Total

revenue (€m)

Notes: (1) Reported figures reflect Group results at 31/3/2010, 31/3/2013 and 31/3/2016. All other reported financial years end in December

(1) (1)(1)

Public

Analysis of the R&Co MB portfolio

Exposure by instruments

R&Co Group’s MB exposure is mainly equity-related in European companies, heavily weighted

towards our core focus sectors

15

Exposure by industry sector Exposure by geography

14%

27%

21%

38%

Business Services Tech / Data & Soft.

Healthcare Diversified

66%

22%

12%

Equity Senior credit Junior credit

25%

25%

14%

7%

17%

12%

France UK + Ireland

Germany + North. Eur. Other Europe

USA Diversified

Public

Leveraging the Group’s unique market edge and sourcing capabilities

The Group’s synergies

Global presence in

40+ countries

Deep sector

expertise

Broad

network of

operators

Leading advisory

network

16

Synergy Examples

36% of cumulative

capital raised

sourced through

Wealth & Asset

Management

GA benefits include:

1. Sector insights

2. Access to operator

network

3. Market intelligence

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Public

Rothschild & Co has integrated ESG principles into its Merchant Banking investment platform

Corporate social responsibility

The 7 pillars of our Environmental, Social and Governance (ESG) Policy

1. Taking ESG criteria into account during the analysis and decision making processes for all investments

2. Disseminate the UN PRI and ensure the application of these principles throughout the entities in which we invest

3. Inform our investors of this ESG policy and provide them with information on our approach to ESG issues on a regular basis

4. Adopt a responsible and ethical approach to governance

5. Encourage a human resources policy which values and respects all employees

6. Reduce the environmental impact of our activities

7. Promote our employees’ commitment to society

Pre-investmentDue Diligence &

Investment DecisionHolding Period

Our due diligence seeks to identify and

assess management of key ESG issues.

These are then considered as part of the final

Investment Committee approval process.

We maintain close ongoing dialogue with

portfolio company management teams,

including in respect of ESG issues.

We request reports on their ESG approach

and on defined key ESG indicators through

our annual ESG Questionnaire.

We try to promote the principles of responsible investment within our investments and strongly encourage our partners to consider

ESG criteria in their activities.

We invest across carefully chosen sectors.

Our preliminary screening ensures we avoid

investing in unethical sectors or which are banned

under the Five Arrows Managers Investment

Exclusion Policy.

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Public1

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estimates and is subject to a number of factors and uncertainties, that could cause actual figures to differ

materially from those described in the forward-looking statements including those discussed or identified in the

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& Co Group.

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