Specialist investment bank Investec Bank Australia yesterday said it signed a heads of agreement to acquire NM Rothschild & Sons (Australia). According to a media release issued by Investec group head office in South Africa, the transaction represents a value of "less than five per cent of the Investec group's combined market capitalization" which would translate into a purchase price of circa $170 million.The businesses being sold are the project finance and resource lending arms to Rothschild in Australia, which, along with related treasury activities, account for more than half the $82 million in revenue earned by Rothschild in the year to March 2005.The transaction is conditional on Investec receiving regulatory approval and completing final due diligence and is therefore expected not to be finalised before July 1 at the earliest, Investec Bank Australia CEO Brian Schwartz told The Sheet.Through this transaction, Investec will more than double its current presence in Australia. NM Rothschild has total assets of $2.1 billion compared with $1.5 billion for Investec Australia and employs 170 people compared with 123 at Investec. The combined companies will employ fewer staff with Schwartz flagging there were synergies up for grabs through merging both back office operations into one.One of the key advantages of the deal is that it will give Investec an instant presence in Perth. Schwartz said Investec has been looking at opening its own offices in Perth for a while now, with the booming local mining industry and many ex-pats from the UK and South-Africa seen as a "natural fit".Schwartz expects a sized up local Investec operation will become more attractive to corporate Australia.ASIC lodgments show NM Rothschild made an operating profit after tax of only $1.2 million for the financial year to 31 March 2005, down from $3.4 million the previous year. The results for the twelve months to March 2006 have not been released yet.The financial statements suggest that providing banking services to corporate clients was the only profitable activity at NM Rothschild, with investment banking and treasury reporting a loss for both the 2004 and 2005 financial years. For investment banking the operational loss had grown to $1.8 million in 2005 from $1.18 million the year before. Treasury improved its result last year to a loss of $1.47 million from $7.3 million the previous year.The operational result for NM Rothschild's banking operations fell from $12 million in 2004 to $2 million last year.Investec Bank (Australia) posted an after tax operating profit for the six months to 30 September 2005 of circa $13.5 million.