Thursday, 20 September 2007

Renaissance's new Africa fund seen capped at $1bn

Business New Europe

Jason Corcoran in Moscow


Russia's Renaissance Investment Management expects to take in commitments worth $350m from institutional investors shortly after the launch of their new Africa fund on October 1.

The fund manager, which is a subsidiary of Renaissance Capital investment bank, is confident of capping the sub-Saharan equity fund at $1bn in 2008. "We have seen enough interest from fund of funds and institutions that we don't need to seed it. We expect to raise $350m by the end of the year and then we aim to cap it at $1bn next year," Daniel Broby, who was hired as chief investment officer three months ago, told bne.

Prior to Renaissance, Broby was head of investments at Denmark's third-largest asset manager Bankinvest, responsible for the investment process and the day-to-day running of the quoted equity, bond and guaranteed products. He launched Denmark's first and only regulated hedge fund on behalf of Bankinvest in 2005.

Broby said David Damiba, a Wall Street veteran of Merrill Lynch and Madoff Investment, and Kirsten Goliath have been hired to run the fund from London.

Renaissance's Dublin-listed fund, which requires a minimum investment of $100,000, will have strict redemption terms and will be targeted at institutions. A more illiquid and concentrated African fund will be made available to Russian investors shortly.

Flying visit

Broby said Renaissance staff had recently taken 35 managers from multinational investment funds on a 10-day whistle-stop tour of six African countries featured in the fund. Managers have already identified 540 listed companies that are suitable for investing in. Nigeria is the fund's main focus with exposure potentially accounting for 50%, while Kenya and the Francophone countries will make up most of the remaining allocation.

"We are not replicating what Fidelity or Union Bank of Switzerland have done," comments Broby. "Russian investors are different and our clients will expect higher returns than 7% from such funds."

"Our managers are used to delivering in frontier markets, dealing with corruption and lots of paperwork," he adds.

Fund management licenses are being sought throughout the region so Renaissance can open offices for managers and a research team on the ground. The funds team are piggy-backing on the investment bank, which has done two public offerings in Africa in four months. Renaissance is forecasting a capital flight in the near future because of the flat market at home and the impending presidential elections next year.

The group have recently opened offices in Zurich, Dubai, Singapore and Hong Kong to service the desire of clients to diversify. Renaissance Investment Management currently has $4.5bn in assets under management.

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