ROYAL & SUNALLIANCE, the general insurer, severed its 181-year link with Rothschild yesterday when it sold its 21.5 per cent shareholding in the parent company of the British merchant bank.
Jardine Strategic, part of Jardine Matheson, the Hong Kong investment company, bought a 20 per stake in Rothschilds Continuation Holdings (RCH), a major holding company in the Rothschild Group, from R&SA for £101.1 million. The insurance company will make a £60 million pre-tax gain on the disposal.
A Rothschild employee share trust paid £7 million for the remaining 1.5 per cent.
The sale was part of a wider restructuring programme instigated by Andy Haste, the R&SA chief executive, in which he has sold off assets to concentrate on general insurance.
The purchase will give Rothschild, through Jardine, a greater presence in the Far East, where it is looking to expand.
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Shedding its share of the bank will further reduce R&SA’s investment in equities, which currently make up about £1 billion of its £15 billion investment portfolio. The insurer said that it would reinvest the proceeds of the sale.
Rothschild and R&SA have been connected since 1824, when Nathan Rothschild and Sir Moses Montefiore set up Alliance Insurance, R&SA’s predecessor, with capital made from funding the Napoleonic wars.
For almost its entire history, a Rothschild family member has sat on the board of the insurance company.
David de Rothschild, chairman of RCH, said yesterday that he understood Mr Haste’s decision to dispose of non-core investments.
Henry Keswick, chairman of Jardine Matheson, said that his company had an illustrious history with RCH, having first acted as an agent for the merchant bank in China in 1838. “We look forward to being a supportive shareholder,” he said.
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Jardine Strategic is a holding company that makes long-term investments in multinationals with an Asian focus, including Dairy Farm, Hongkong Land and Mandarin Oriental.
Earlier this year, Rothschild strengthened its presence in Japan by linking up with Nomura, the Japanese securities firm, in a deal that boosts each other’s presence in their respective markets.
The alliance, in which the partners will focus on giving advice on mergers and acquisitions between Japanese and European companies, was the first time that such an agreement has been struck between European and Japanese investment banks.