Monday, Dec 11, 2006

By Simeon Kerr

Of DOW JONES NEWSWIRES

DUBAI (Zawya Dow Jones)--European investment bank Rothschild plans to open its first group office in the Middle East this week to boost its global presence and advise regional investors on cross-border mergers and acquisitions.

In an interview, Lionel Zinsou, Rothschild's general partner and head of Middle East and Africa, and Dubai-based manager Michael Helou said the privately owned investment bank hopes the new office in Dubai will help it bridge the geographical gap between the firm's European and Asian operations.

"It is very hard to remain credible bankers in Asia or Europe if you aren't here in the Middle East," said Zinsou.

Rothschild, which has a number of separate investment operations based in London, Paris and Geneva, hopes the firm's international network and expertise will help it seal deals in the region, but its long-term goal is to become a player in Middle Eastern banking in its own right.

Rothschild's entry into Dubai comes relatively late, however. Major banks like Morgan Stanley (MS), Credit Suisse (CS), HSBC (HBC), Merrill Lynch (MER), JPMorgan (JPM) and Goldman Sachs (GS) are already operating, or on the verge of opening, in Dubai's tax-free financial district.

Even so, Rothschild is already starting to land business. One Indian company, for example, has asked the bank to find it a strategic investor willing to pour cash into the company in exchange for an equity stake. Given the rising interest from the Persian Gulf in Indian and other Asian markets, Rothschild needs to be on the ground here, Zinsou said.

Rothschild is also already working on two mandates for mergers and acquisition and debt financing. One is for a company in the telecoms industry and the other is from a financial institution, Zinsou added.

The bank says its expertise in advising on mergers and acquisitions and debt finance comes at an ideal time for the region, where years of sky-high oil prices have fueled a spending spree from government and private investment houses, as well as a thriving regional private-equity industry.

Government-owned investment firms are actively seeking to snap up firms in a bid to diversify assets derived from oil income, or in the case of Dubai, the emirate's successful real estate market.

The region's well-capitalized telecoms firms - such as Kuwait's Mobile Telecommunications Co. (MTC) and the United Arab Emirates' Etisalat - are highly acquisitive, expanding into Africa, Asia and Europe in the hunt for new investments after having made several regional purchases.

Helou added that energy should prove to be another sector for the bank to focus its advisory services on.

The bank advised European clients on the sale of Peninsular & Oriental Steam Navigation Co. to DP World as well as SR Technic's acquisition by a Dubai-Abu Dhabi government consortium.

Rothschild also advised Egypt's Orascom Telecom on its entrance into European telecoms through the purchase of Italian telecoms firm Wind SpA - the largest Middle East investment into the European corporate sector - as well as advising Moroccan conglomerate Group ONA on deals in Canada and France.

Rothschild, owned by a German family, is a private firm and as such it believes its discreet nature will appeal to regional clients, where family-owned money rules.

"We are very discreet, which could be more relevant to this region than others," said Zinsou.

-By Simeon Kerr, Dow Jones Newswires; +971 5 0625 1228; simeon.kerr@dowjones.com

Copyright (c) 2006, Dow Jones & Co., Inc.

(END) Dow Jones Newswires

11-12-06 1029GMT