Mark Zuckerberg’s $14-billion Facebook stake has heaped fresh attention on the newly-minted rich. But, the old money, with its slower, quieter approach, hasn’t gone anywhere. David Rockefeller, 96, and Jacob Rothschild, 76, sent a reminder to that effect with the transatlantic investment alliance they unveiled on Wednesday.
Rothschild’s RIT Capital Partners, a £1.9-billion, London-listed investment fund, is buying a 37 per cent stake in Rockefeller Financial Services from Société Générale. The 130-year-old US firm started as the founder oil baron’s family office and now manages $34 billion for his descendants, other wealthy clans and institutions. It’s, perhaps, surprising the two patriarchs, acquainted for five decades, took so long to do business together.
RIT’s investment is likely to lead to other collaborative efforts. The Rockefeller name, of course, opens doors everywhere. But, Rothschild, too, has a network that brings in all sorts of projects, even a joint venture private equity fund aimed at Chinese investors. It’s easy to see scope for new opportunities involving both firms. RIT boasts of a 168 per cent cumulative gain in net asset value over the 10 years to last September, against just 12 per cent for the MSCI World Index of stocks.
That’s a tortoise pace compared to the speed at which the likes of Zuckerberg have amassed their fortunes. Technology sector entrepreneurship is a modern way to build the sort of fortune John D Rockefeller did. The Facebook founder, in turn, made the creators of Instagram instantly wealthy by agreeing to pay $1 billion for the photo-sharing start-up just 18 months after it launched.
Yet, Silicon Valley’s leading lights, as well as figuring out how to give money away – another expertise of Rothschild and Rockefeller alike – will one day want to take less risk with their lucre. Zuckerberg may not care that he tumbled so quickly out of Bloomberg’s real-time list of the world’s 40 richest people after Facebook shares plummeted following its initial public offering. But, older technology bosses and their heirs most likely will.
The old rich know something about capital preservation and investing for the long term. Rothschild’s reaction to a decline in RIT’s net asset value over a stretch last year – professing “a rooted objection … to any fall in value” – hints at the mindset. Wealth that is generations old doesn’t always top rich lists, partly because it is dispersed. But, it has staying power even hoodied tech billionaires may one day crave for.
