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. Last Updated: 07/27/2016

Renaissance Plans $1Bln Africa Fund

For MTHans Jochum Horn, Renaissance Group's managing director, addressing executives from the company's Africa team.
Stephen Jennings, the billionaire founder of Renaissance Capital, plans to double his investment in Africa to at least $1 billion this year as the country's record stock rally stalls.

"If Russia was a once-in-a-lifetime opportunity, sub-Saharan Africa is a second once-in-a-lifetime opportunity," Jennings said in a recent interview.

Jennings, who started Renaissance in 1995 with former bankers from Credit Suisse Group, including Boris Jordan, is looking to Africa as the RTS index heads for the first decline in eight years and as competition increases from Goldman Sachs and Lehman Brothers.

Africa's longest expansion in more than three decades is fueling demand for overseas capital. The IMF last month raised its economic growth forecast for southern Africa to 6.8 percent this year from 5.7 percent in 2006, boosted by oil-exporting Angola and Nigeria.

Renaissance plans to open a Dubai office to help channel oil money from the Persian Gulf into Africa. Jennings, who already has offices in Nairobi, Kenya, and Lagos, Nigeria, wants to challenge China, the biggest foreign investor in the continent.

Chinese President Hu Jintao vowed to boost investment and imports during a 12-day, eight-nation tour in February.

"Africa is going through an enormous renaissance and unlike Russia in the 1990s, it's not a matter of imagining that it might happen, it is happening," Jennings said. "With the exception of the Chinese, we will be one of the largest financial investors in the region. We have the ability and capacity to make quite big investments and bring in co-investors."

Renaissance Capital is part of Renaissance Group, which also owns a private equity firm, a consumer lending bank and asset management arm.

Jennings owns a controlling stake in Renaissance according to documents for a 2005 bond sale. He declined to comment on the size of his stake, which Forbes magazine said in November was worth more than $1 billion. Renaissance Partners, a private equity arm, already has $500 million of assets in Africa, including a 25 percent stake in Ecobank Transnational, a Togo-based lender that has operations in 17 western and central African countries. It is targeting more banks and retailers on the continent, Jennings said, declining to elaborate.

Renaissance, which announced nine new hires for Africa last month, including bankers from Credit Suisse and Citigroup, aims to have 100 people working on its business there by year's end.

"A lot of people are looking at Africa and it's not going to be easy to grab market share,'' said Steve Cook, a credit analyst at Commerzbank in London. "They haven't been here in any material way. It doesn't work like in the former Soviet Union. Only time will tell.''

Renaissance last month helped organize the $300 million stock sale of United Bank for Africa, Nigeria's largest lender by assets. Renaissance expects to underwrite its first African corporate debt as early as July, and aims to sell those securities to investors in the Middle East.

"Middle Eastern investors will play a major, major role as financial investors in recapitalizing the sub-Saharan region,'' Jennings said.

The brokerage business still accounts for about 70 percent of Renaissance Capital's revenue, making it "vulnerable'' to falling markets, Standard & Poor's said in a report this month. Risk management "remains a relative weakness," S&P said.