Bumi bummer: Rothschild dynasty sucked into Indonesian black coal hole

Bumi’s founder, Nat Rothschild.

It was a billion dollar deal that was supposed to bring two famous business dynasties together – one from the East and the other the West.

Nat Rothschild, descendant of the founder of the two-centuries old banking empire, used his family name to get big players – “and big players only” – to back him in a deal to bring a chunk of the vast business interests of the Bakrie family of Indonesia to the City of London.

Listing the coal and other mining interest in London provided the members of Sumatran family –  one of which has a good chance of becoming president of the world’s fourth most populous nation – a high profile in the West and at the same time gave Nat, 41, the chance to finally transform his popular image from that of a partying rich kid  into a financier with true investment chops.

It was not to be.

Barely two years after listing, Bumi plc is collapsing amid bitter recriminations, allegations of financial impropriety and a downturn in the market. Investors – including according to some reports members of the UK royal family – have lost three quarters of their money.

Nat Rothschild has resigned from the board saying that the chairman of Bumi, Samin Tan and other Indonesian members don’t have the interests of minority shareholders at heart as they launch a buyout of Bumi. For his part, Tan calls Rothschild’s actions disruptive and alleges that Bumi’s computer systems have been hacked into.

The mutual loss of trust has been rapid – less than a year ago Rothschild told an audience that he only ever had two business partners in his career – the Bakries and Peter Munk, Canadian founder of Barrick Gold.

Mail Online reports the Rothschild name – already hurt by a bitter family rift dating back 30 years – has suffered serious damage:

The crisis has been a shock to Nat Rothschild’s overblown ego, especially as many feel his reputation can never fully recover, and one top City banker was quoted in The Times this week as saying that ‘Nat Rothschild will never raise another dollar from anybody’.

Another puts it this way: ‘His name has become toxic in the City of London.’

The Financial Times argues the deal probably made little sense from its very beginnings:

Money attracts money but, even so, it is astonishing that two years ago, in the middle of a recession, Nat Rothschild could persuade investors to put £600m into Vallar, an unknown company, “to acquire a single major business or operational asset in the global metals, mining and resources sector . . . where the experience of the Vallar team can be leveraged”. An alternative wording, such as “an undertaking of great advantage, but no one to know what it is”, may have had too many unwanted resonances.

Image of Nat Rothschild speaking in 2009 after his horse won a race, from YouTube.