Rothschild Group / Rothschild Mexico provides the highest quality financial advice and execution in the fields of mergers & acquisitions and financial restructuring..

Just two years before Mexico became an independent nation in 1810, Nathan Mayer Rothschild set up business in London as a merchant and banker. By the end of the 1820s, he and his four brothers, now spread out across Europe, had become the most powerful international investment bankers in the world. Rothschild clients included all the major European governments as well as those of emerging nations around the globe.

It was N M Rothschild's interest in the mining, refining and trading of gold which first brought the bank to Mexico.

From 1830 N M Rothschild had secured a virtual world monopoly in the mining of mercury, essential to the refining of gold and silver. As the mineral wealth of Mexico began to be explored more fully in the 1830s, the Rothschild family saw an opportunity to sell mercury to the mining community.

In 1838 the bank appointed the company, William de Drusina & Co. of Mexico City, as its agents to carry on this work.

With this connection in place, trade soon developed. Drusina shipped gold back to Europe on behalf of N M Rothschild & Sons where it was refined and traded. At the same time, Mexican cochineal was amongst a range of products that were shipped to NMR in London for sale throughout Europe.

Business grew and in 1843, Lionel Davidson, a cousin of the Rothschild family, was sent to Mexico to strengthen the links and to take charge of the mercury side of the business. Impressed by the country, the Rothschild family invested in an ironworks at San Rafael which they held for several decades and also began to import English goods, in particular iron, for use on Mexico's developing railroad network.

In the 1880s, the Rothschilds' Paris bank followed London and took a large stake in a Mexican copper mine. Fifty years after their first steps in Mexico, Rothschild was well rooted in Mexican soil.

In recent decades, building upon these early roots, the N M Rothschild Group has energetically expanded its links with the country.

A turning point came in 1970 when N M Rothschild established an office in Mexico. In the following year the Bank raised the first major Eurodollar credit of $100 million for the Mexican Government. It was then the largest credit of its kind ever raised for the United Mexican States. At the same time they were giving investment banking advice on the financing of a nuclear power project (the Laguna Verde plant, located in Veracruz) for the Comisión Federal de Electricidad.

Almost every year during the 1970s NMR participated as underwriter in substantial bond issues on behalf of the United Mexican States (including Mexico's first international bond issue in 1973) and for Petroleos Mexicanos and Telefonos de Mexico. It also raised finance for the purchase of "Azteca" patrol boats for the Mexican Navy and arranged credit facilities for a number of Mexican and international companies operating in Mexico, including Asea de Mexico, AGA de Mexico and Fraccionadora y Hotelera del Pacifico.

Leopold de Rothschild led several trade missions of British businessmen to Mexico, arranged a meeting at Windsor Castle between leading British businessmen and the President of Mexico and organised a delegation of British businessmen to accompany the Queen on her State Visit to Mexico in 1975.

In 1980 Leopold de Rothschild founded and chaired the Anglo-Mexican Committee, set up on the initiative of the President of Mexico to explore further areas for British investment in the country.

The 1980s saw a continuation of these lines of business. Increasingly NMR was called in by international companies to advise on their involvement in the Mexican market. Among these leading industrials were the Dale Electric Group (1981), Balfour Beatty (1984), British Aerospace (1985), Colgate-Palmolive (1986), GEC Plessey Telecom-munications (1988) and British American Tobacco (1989).

In this period, Rothschild co-led with Baring Brothers a £365 million acceptance facility for Petroleos Mexicanos, the largest sterling acceptance thus far arranged for Mexico. A £52 million acceptance was also raised in 1982 for Conasupo, a government owned food distribution company.

In 1982, Rothschild arranged an ECGD facility for the Mexican Ministry of Education for the purchase of technical equipment for £36.8 million. In the meantime, Mexican companies were increasingly turning to NMR for strategic advice, among them Grupo Sabre on its hotel and tourism business (1984), Multibanco Mercantil (1984), Grupo Pliana (1985) and Tubos de Acero de Mexico on financial restructuring (1988).

In 1992, building on the experience of the past two decades, N M Rothschild & Sons (Mexico) S.A. de C.V. was incorporated to consolidate the Rothschild presence in Mexico and to establish a prestigious merchant banking group at the heart of Mexican commerce. Partners in this venture were the Matte Group.

Throughout the 1990s, financial advice to overseas investors in the Mexican economy continued. New clients included Unilever (1990), Coats Viyella (1992), Tate & Lyle (1994), American Express (1996), ] ICI (1997) and ED&F Man (1998).

Among leading Mexican companies which NMR was commissioned to advise were Grupo Desc on the sale of its pharmaceutical companies (1993), Grupo Financiero Mifel on its 1994 restructuring, Grupo Financiero del Sureste on restructuring (1996), private local investors on their application to establish Sociedad Financiera de Objeto Limitado, a new construction and mortgage lending company (1996) and Mexicana de Hidroelectricidad on the financing of a hydro-electric plant in the state of Guerrero (1998).

Continuing privatisation of State assets by the Mexican Government provided opportunities to advise potential buyers. In 1991 a group of Mexican investors were successfully advised on the acquisition of Banco de Credito y Servicios. In 1992 advice was given to a group of media entrepreneurs and other investors on their bid for the State-run television networks, Red Canal 7 and Red Canal 13, which was followed in 1994 by advice to Cosmovision on the acquisition of Television Azteca and other media concerns. The privatisation of the newspaper El Nacional in the same year led to a mandate to NMR. More recently, NMR Mexico was appointed in 1998 to advise the British Airports Authority on the privatisation of the Mexican airport system while at the same time, together with ABN AMRO, NMR Mexico advised Gaz de France on its successful bid for the natural gas distribution system in Mexico City.

The national infrastructure has provided a developing field of involvement. In 1993 NMR Mexico acted as financial advisor for an international contractor consortium in their bid to build an operator port and coal handling facility for the Petacalco thermal power plant. This represented the First BOT project in Mexico and in the same year another international consortium was bidding, with NMR advice, for the Los Huites hydro-electric project. In the following year a consortium led by NMR Mexico was appointed to advise Empresa Colombiana de Petroleos-Ecopetrol, the State oil company, on the concession to build and operate the Mariquita-Cali natural gas pipeline to supply gas to the western part of that country. In 1996 NMR Mexico advised the Aeronáutica Civil of Colombia in the concession for the construction and operation of an additional runway for the Bogotá Airport. These transactions led to the incorporation of RC Corporate Consultants Ltda., NMR Mexico's Colombian subsidiary where privatisation and corporate finance work, including the privatisations of Empresa de Energía de Bogotÿ and the Cali Airport have been undertaken.

In 1995, 1996 and 1997, NMR Mexico acted for FOBAPROA (the Mexican Government's Savings Protection Fund) on the capitalisation and subsequent sale of Banpaís, a commercial bank that had been intervened by the Financial Authorities. This process achieved an unprecedented level of competitive tension resulting in the re-privatisation of this bank.

In 1997, came the opportunity for NMR Mexico to advise and finance a bidder consortium which included Tractebel, Iberdola and Siemens on a $300 million bid to construct a new power station. In 1998, came the appointment by the port authority of Santa Marta in the state of Magdalena (Colombia) to advise on the financing, construction and operation of an expanding coal handling facility, capable of exporting 1.2 million tonnes of coal each year.

In 1998 NMR Mexico advised Siemens Mexico and Simens AG on the financial structure and funding for the construction of 13 gas-insulated substations to be leased to Comisión Federal de Electricidad.

In the same year (NMR Mexico) advised Tractebel on its successful bid for the concession to build and operate the gas distribution system for the city of Queretaro.

In recent years NMR Mexico has participated in the structured finance for a number of energy related projects including over 12 transmission lines and 24 substations for various clients.

Recently, NMR Mexico advised on the negotiations of two separate Power Purchase Agreements for Apasco, the Mexican subsidiary of Holderbank.

NMR Mexico serves as a platform for privatisations in the region. It acted for Grupo Domos (a Mexican telecoms company) in their acquisition of ETECSA, the Cuban telephone monopoly. It has advised the Government of Nicaragua on the restructuring and preparation of ENITEL, the government-owned telecoms company, prior to its privatisation and has acted for the government of Honduras on restructuring of Hondutel, also a government-owned telecoms company, in preparation for its capitalisation process.

As we enter the 21st century NMR Mexico continues the links between the Rothschild family and the Mexican nation which have endured for the better part of two centuries. Drawing on the strengths of international unity which have, from the beginning, been the key to Rothschild success, NMR Mexico is matching local knowledge and experience to global expertise and applying both to Mexico's future.

The Rothschild Archive, September 2001