After being forced to sell, in the grip of Russia’s September 2008 market meltdown, a 50% stake in RenCap for a modest $500 million, CEO Stephen Jennings’s appetite for risk is back with a vengeance. In July, the bank bought South African brokerage BJM Securities for $27.3 million to beef up its research, sales and trading capabilities in Africa’s largest economy.
In May, Jennings revealed in an interview with Emerging Markets that Renaissance Partners, the parent holding company of the investment bank, would over the next two years increase its balance sheet exposure to Africa to 25%, from 15%. And in June, RenCap made good on its promise to channel Chinese capital to Africa in its role as adviser to Beijing-based China Railways, which took a 12.5% stake in Channel Islands-based African Minerals.
RenCap started its African business in 2007 and has operations in Nigeria, Ghana, Zambia, Kenya, Zimbabwe – though it does not have a brokerage licence there. The lender is scouring acquisitions in Tanzania, Mozambique, Angola, Botswana and Uganda. In all likelihood, the bank’s expansion bid will take substantially longer than it expects due to a shortage of investable banking assets in Africa and the region’s torturously slow bureaucracy.
Africa, after all, is still hardly the new Asia or Latin America: the region is barely integrated with the global economy, and equity, debt and syndicated loan offerings are, in the main, relatively small – and invariably limited to commodities and telecommunications. But if African growth proves sustainable in the decades to come, RenCap may have assumed first-mover advantage in the world’s last frontier region.