Financial News
February 2 2009
Jason Corcoran in Moscow
Renaissance Capital has parted company with two executives, Richard Olphert and Rory Cullinan, in a second round of job cuts at the Russian emerging markets investment bank, according to people with knowledge of the situation.
The Moscow-headquartered bank, run by New Zealander Stephen Jennings, has been cutting costs and retreating to its core Russian market following the sale of a 50% stake in the business last year to billionaire Mikhail Prokhorov.
A Renaissance spokesman declined to comment on the departure of Olphert, chairman of Renaissance’s private equity arm and a leading shareholder. The bank confirmed Cullinan, hired as deputy chairman of Renaissance Partners from private equity firm Permira Partners in August 2007, had left before the start of this year and the private equity team had been pared back to eight from a staff of 12.
Another casualty is global head of communications Simon Moyse, a former adviser to British Prime Minister Gordon Brown hired from UK-based press relations agency Finsbury in September last year.
After cutting a quarter of its 1,500 staff in November, Renaissance Capital insiders said a second round of redundancies is under way. RenCap’s London office, which once had 150 employees, has been reduced to a few dozen staff.
The departure of Olphert, a close ally of Jennings, surprised one Renaissance Capital banker, who said: “Richard was the second largest shareholder after Stephen. They lived close to one another, they went on holiday together on Stephen’s Gulfstream jet.”
Renaissance Partners, the private equity firm which raised a $600m fund last year, realised substantial losses through investments in Ukraine and Africa, according to Russian business paper Vedemosti. A Renaissance spokesman declined to comment on the reported losses.
Showing posts with label Stephen Jennings. Show all posts
Showing posts with label Stephen Jennings. Show all posts
Tuesday, 10 February 2009
Monday, 22 September 2008
Rencap sells 50% stake to billionaire Prokhorov
Financial News Online
Jason Corcoran in Moscow
22 September 2008
Russian investment bank Renaissance Capital has given up its much vaunted independence after selling a 50% stake to billionaire client Mikhail Prokhorov for $500m (€342m) amid the worst market falls in Moscow since the 1998 financial crisis.
Renaissance and the Onexim investment vehicle owned by Prokhorov, who made his money from metals and banking, will buy new equity amounting to 50% of the brokerage for $500m, with the old shareholders retaining a one-share voting majority.
The deal follows a week when market turmoil drove domestic indices down by 25% in just three days and forced another brokerage KIT Finance to agree to sell a controlling stake Leader Asset Management, the pension fund manager of energy giant Gazprom.
A Moscow spokesman for Renaissance said the deal had been in the pipeline for months but had been accelerated due to recent market conditions. "Events in the market moved the negotiations along."
A hastily arranged press conference featuring Prokhorov and Renaissance founder Stephen Jennings was organised at the Ritz hotel in Central Moscow.
Prokhorov said at the press conference: "We've been negotiating for several months. The problems of the global economy sped up the talks... Together with our partners we are ready for major expansion," including in Western markets.
Renaissance said it had not suffered any writedowns or losses due to the markets.
One Russian financier expressed surprise that Renaissance had sold so cheaply. "The market has hit everyone but I thought Rencap would fetch more. Bankers were putting the value of the investment bank at $3-4bn a year ago," the financier said.
Jennings, who set up Rencap in 1995 with a Credit Suisse colleague Boris Jordan, had previously rebuffed interest in the business from western banks and state-controlled VTB Bank.
In an interview with Financial News a year ago, he said selling out, as rival brokerages Brunswick and UFG have, would ruin Rencap's reputation for providing clients with impartial and independent services.
He said: "It would be very damaging and what you sold would be slightly damaged by the time you sold it. By virtue of the sale process, you would lose something. We have seen that has happened in the market here."
In a statement today, Jennings said: "The partnership with Onexim creates a financial powerhouse with the resources, skills and ambition to be the clear leader in all its markets. At a time when many of our competitors are weakened, our unique franchise, solid capital platform and highly motivated staff will enable the firm to aggressively pursue growth opportunities."
Renaissance Group's other asset management, private equity and consumer finance arms are not part of the sale.
Onexim is one of Russia's largest private investment funds, with a focus on mining industry, innovative projects in energy and nanotechnology, real estate and other industries. It has more than $25bn in assets.
Prokhorov was joint owner of mining giant Norilsk Nickel alongside Vladimir Potanin until a very public business divorce led him to sold most of this stake to tycoon Oleg Deripasksa earlier this year.
Renaissance advised Onexim last year on the exchange of its 25% stake in Norlisk Nickel with Deripaska.
A Rencap source said the bank's independence would not be damaged by selling to Prokhorov's group. "Onexim is not Gazprom or the Kremlin. It's an independent investment vehicle."
Onexim will contribute to the strategic direction of the investment bank and will be able to nominate three of the seven board members of Renaissance Capital.
Renaissance Capital was created in 1995 by New Zealander Jennings and American Boris Jordan, who left top positions at the Russian division of Credit Suisse First Boston to establish their own business. Jennings is believed to own an 80% stake in the business.
Following Russian default on its sovereign debt and the economic crisis in 1998, Jennings bought out three other shareholders, Leonid Rozhetskin, Richard Ditz, and Anton Kudryashov, and took sole charge when Jordan left.
In the past two years, Jennings had led the bank's rapid expansion to set up in new frontier markets in Sub-Saharan Africa and Central Asia.
www.efinancialnews.com
Jason Corcoran in Moscow
22 September 2008
Russian investment bank Renaissance Capital has given up its much vaunted independence after selling a 50% stake to billionaire client Mikhail Prokhorov for $500m (€342m) amid the worst market falls in Moscow since the 1998 financial crisis.
Renaissance and the Onexim investment vehicle owned by Prokhorov, who made his money from metals and banking, will buy new equity amounting to 50% of the brokerage for $500m, with the old shareholders retaining a one-share voting majority.
The deal follows a week when market turmoil drove domestic indices down by 25% in just three days and forced another brokerage KIT Finance to agree to sell a controlling stake Leader Asset Management, the pension fund manager of energy giant Gazprom.
A Moscow spokesman for Renaissance said the deal had been in the pipeline for months but had been accelerated due to recent market conditions. "Events in the market moved the negotiations along."
A hastily arranged press conference featuring Prokhorov and Renaissance founder Stephen Jennings was organised at the Ritz hotel in Central Moscow.
Prokhorov said at the press conference: "We've been negotiating for several months. The problems of the global economy sped up the talks... Together with our partners we are ready for major expansion," including in Western markets.
Renaissance said it had not suffered any writedowns or losses due to the markets.
One Russian financier expressed surprise that Renaissance had sold so cheaply. "The market has hit everyone but I thought Rencap would fetch more. Bankers were putting the value of the investment bank at $3-4bn a year ago," the financier said.
Jennings, who set up Rencap in 1995 with a Credit Suisse colleague Boris Jordan, had previously rebuffed interest in the business from western banks and state-controlled VTB Bank.
In an interview with Financial News a year ago, he said selling out, as rival brokerages Brunswick and UFG have, would ruin Rencap's reputation for providing clients with impartial and independent services.
He said: "It would be very damaging and what you sold would be slightly damaged by the time you sold it. By virtue of the sale process, you would lose something. We have seen that has happened in the market here."
In a statement today, Jennings said: "The partnership with Onexim creates a financial powerhouse with the resources, skills and ambition to be the clear leader in all its markets. At a time when many of our competitors are weakened, our unique franchise, solid capital platform and highly motivated staff will enable the firm to aggressively pursue growth opportunities."
Renaissance Group's other asset management, private equity and consumer finance arms are not part of the sale.
Onexim is one of Russia's largest private investment funds, with a focus on mining industry, innovative projects in energy and nanotechnology, real estate and other industries. It has more than $25bn in assets.
Prokhorov was joint owner of mining giant Norilsk Nickel alongside Vladimir Potanin until a very public business divorce led him to sold most of this stake to tycoon Oleg Deripasksa earlier this year.
Renaissance advised Onexim last year on the exchange of its 25% stake in Norlisk Nickel with Deripaska.
A Rencap source said the bank's independence would not be damaged by selling to Prokhorov's group. "Onexim is not Gazprom or the Kremlin. It's an independent investment vehicle."
Onexim will contribute to the strategic direction of the investment bank and will be able to nominate three of the seven board members of Renaissance Capital.
Renaissance Capital was created in 1995 by New Zealander Jennings and American Boris Jordan, who left top positions at the Russian division of Credit Suisse First Boston to establish their own business. Jennings is believed to own an 80% stake in the business.
Following Russian default on its sovereign debt and the economic crisis in 1998, Jennings bought out three other shareholders, Leonid Rozhetskin, Richard Ditz, and Anton Kudryashov, and took sole charge when Jordan left.
In the past two years, Jennings had led the bank's rapid expansion to set up in new frontier markets in Sub-Saharan Africa and Central Asia.
www.efinancialnews.com
Monday, 21 April 2008
Lehman to end Russian joint venture
Financial News
Jason Corcoran in Moscow
21 April 2008
US investment bank Lehman Brothers is phasing out its M&A advisory joint venture with Russia’s Renaissance Capital as it builds its presence in Moscow. The move comes just weeks after bank Royal Bank of Scotland announced the end of its derivatives joint venture with the Russian group.
Lehman, which re-entered the Russian market last year, anticipates being up to scale by September when it moves into its new offices in the emerging business district of Moscow City.
A source close to the bank said: “The arrangement is being phased out. As we build out our own M&A capabilities in Russia, the need for that is diminished as we become more like competitors rather than joint venture partners.”
The tie-up had seen the two banks co-operate on a number of deals in the natural resources sector over the past few years.
Nick Jordan, who is leading the investment banking business for Lehman in Moscow, previously advised energy group Gazprom and other blue chips on some of their biggest acquisitions.
Renaissance founder Stephen Jennings last year said the arrival of Jordan from Deutsche Bank would not threaten its agreement with Lehman.
Renaissance was unavailable for comment.
Jason Corcoran in Moscow
21 April 2008
US investment bank Lehman Brothers is phasing out its M&A advisory joint venture with Russia’s Renaissance Capital as it builds its presence in Moscow. The move comes just weeks after bank Royal Bank of Scotland announced the end of its derivatives joint venture with the Russian group.
Lehman, which re-entered the Russian market last year, anticipates being up to scale by September when it moves into its new offices in the emerging business district of Moscow City.
A source close to the bank said: “The arrangement is being phased out. As we build out our own M&A capabilities in Russia, the need for that is diminished as we become more like competitors rather than joint venture partners.”
The tie-up had seen the two banks co-operate on a number of deals in the natural resources sector over the past few years.
Nick Jordan, who is leading the investment banking business for Lehman in Moscow, previously advised energy group Gazprom and other blue chips on some of their biggest acquisitions.
Renaissance founder Stephen Jennings last year said the arrival of Jordan from Deutsche Bank would not threaten its agreement with Lehman.
Renaissance was unavailable for comment.
Monday, 24 March 2008
Russian bank hires former SEC chairman
Financial News
March 24, 2008
Jason Corcoran in Moscow
Russian banking group Renaissance Capital had hired former chairman of the US Securities and Exchange Commission William Donaldson as a senior adviser.
Donaldson, who stepped down from the SEC in July 2005, has been brought on board to build links between the investment bank and Wall Street.
The former co-founder, chairman and chief executive of US investment banking firm Donaldson, Lufkin & Jenrette, served just over two years following his appointment by his friend President George Bush in April 2003.
Donaldson, the 27th chairman at the SEC, retired after
drawing sharp criticism over the Sarbanes-Oxley legislation, which is designed to increase corporate accountability, and his zealous approach to regulation.
He presided over investigations into mutual fund trading abuses, hedge funds and equity research. Under his leadership, the SEC, frequently working with other state and federal regulators, drew billions of dollars in fines and restitution from firms found guilty of fraud or wrongdoing.
Donaldson, who also served as chairman and chief executive of the New York Stock Exchange, was appointed as advisory council chairman of boutique Perella Weinberg last year.
At Renaissance’s investor conference in Kiev last year, Donaldson spoke on the same platform as the bank’s founder Stephen Jennings.
The pair have known one another since DLJ partnered with Renaissance to bring Russian telecommunications firm Vimpelcom to the New York Stock Exchange in 1997.
In the same year, DLJ announced it would open an office in Moscow just prior to the Russia’s financial crash.
DLJ was one of a roster of Western banks that lost $40 billion when the Russian government defaulted.
On a trip to Moscow a decade ago, Donaldson said the biggest barriers for Russian companies listing overseas were the conversion to Western-style accounting and corporate governance.
Leading Russian search engine Yandex plans to float shares on New York’s Nasdaq this Autumn and Renaissance is one of the three banks who have been hired to organise the offering.
www.efinancialnews.com
March 24, 2008
Jason Corcoran in Moscow
Russian banking group Renaissance Capital had hired former chairman of the US Securities and Exchange Commission William Donaldson as a senior adviser.
Donaldson, who stepped down from the SEC in July 2005, has been brought on board to build links between the investment bank and Wall Street.
The former co-founder, chairman and chief executive of US investment banking firm Donaldson, Lufkin & Jenrette, served just over two years following his appointment by his friend President George Bush in April 2003.
Donaldson, the 27th chairman at the SEC, retired after
drawing sharp criticism over the Sarbanes-Oxley legislation, which is designed to increase corporate accountability, and his zealous approach to regulation.
He presided over investigations into mutual fund trading abuses, hedge funds and equity research. Under his leadership, the SEC, frequently working with other state and federal regulators, drew billions of dollars in fines and restitution from firms found guilty of fraud or wrongdoing.
Donaldson, who also served as chairman and chief executive of the New York Stock Exchange, was appointed as advisory council chairman of boutique Perella Weinberg last year.
At Renaissance’s investor conference in Kiev last year, Donaldson spoke on the same platform as the bank’s founder Stephen Jennings.
The pair have known one another since DLJ partnered with Renaissance to bring Russian telecommunications firm Vimpelcom to the New York Stock Exchange in 1997.
In the same year, DLJ announced it would open an office in Moscow just prior to the Russia’s financial crash.
DLJ was one of a roster of Western banks that lost $40 billion when the Russian government defaulted.
On a trip to Moscow a decade ago, Donaldson said the biggest barriers for Russian companies listing overseas were the conversion to Western-style accounting and corporate governance.
Leading Russian search engine Yandex plans to float shares on New York’s Nasdaq this Autumn and Renaissance is one of the three banks who have been hired to organise the offering.
www.efinancialnews.com
Tuesday, 31 July 2007
Oligarch expects adopted homeland to blossom
Financial News: Focus on Russia
Jason Corcoran in Moscow
30 July 2007
Stephen Jennings, founder of Russian investment bank Renaissance Capital keeps the faith in his new country
It’s clear Moscow is going to be a major capital market
Stephen Jennings, founder of Russia’s Renaissance Capital, may spend as much time in Nairobi expanding the bank’s sub-Saharan operations as in Moscow but he is not betting against the domestic market just yet.
The billionaire, one of two foreign oligarchs in Russia, made his fortune by keeping faith in the country and his investment banking business, which both came close to collapse after the financial crisis of 1998.
Having seen that out, the New Zealander is unlikely to pack his bags for home soon. Nor is he sitting on his laurels, having seen Renaissance break into the top 10 global underwriters of initial public offerings for the first time last month.
Jennings envisages Moscow becoming Europe’s second financial capital behind London, overhauling Frankfurt, Paris and Milan within 15 years.
He said: “It’s clear Moscow is going to be a major capital market. It already is in new issuance and overall market capitalisation. Imagine what’s going to happen with another 10 years of capital accumulation, and how big the domestic capital markets will be.
“Mortgage markets, securitisations markets and derivative markets will be very big. It sounds strange but when you think about it, it’s totally logical.”
Russia has the biggest and most liquid stock market in the region by far, with a market capitalisation of more than a $1 trillion (€723bn). It turns over billions of dollars every day. Its companies were third in the world in terms of fundraising through IPOs in the first half of the year, outpacing the UK and Brazil, according to auditor Ernst & Young.
Jennings admitted that beyond equity issuance, Russia lags its rivals. In terms of foreign exchange trading, commodities, debt and derivatives, Moscow is not on the global radar, he said. But this is changing. Derivatives are now the fastest growing area of Russia’s financial sector as the scale and diversity of Russia’s asset base and securities markets drives its development.
Jennings said Moscow could become the focus of an emerging regional capital market, although it would have to compete with Warsaw, which has attracted several Ukrainian IPOs.
He added: “We will start to see elements of a pan-CIS capital market and it’s more likely than not to be centred on Moscow. When markets get to a certain size, political pressure for that harmonisation will get to be a lot greater. We will see pan-CIS investment banks, we will see pan-CIS commercial banks and that’s starting to happen now.”
Moscow forms a natural bridge between Asian and European markets. For it to develop as a financial hub, Jennings said more widespread equity ownership and growth in domestic pension funds, mutual funds and insurance funds would be needed. Renaissance’s own fund arm, Renaissance Investment Management, is Russia’s market leader and has grown rapidly to $4.5bn in assets under management.
Some signs are encouraging, such as May’s IPO by state-controlled bank VTB. It was the first meaningful allocation of shares to retail investors. More than 131,000 of them applied for stock valued at approximately $1.6bn.
Institutional reform is vital to developing Russian capital markets and Jennings noted its pace has slackened recently, compared to the rate of change in Kazakhstan and Ukraine.
He said: “Russia has been quite good at cutting tax rates or streamlining and simplifying but it hasn’t been very good, so far, at building strong institutions. There will be another phase of reform and then Russia will go through a phase of modernising its institutions. Some aspects of capital market development will have to wait for that phase.”
Jennings said lack of banking reform has hampered financial intermediation and efficiency in financial systems, but has not affected the participation of foreign banks in Russia.
Foreign banks, including France’s Société Générale and Belgium’s KBC Group, were snapping up Russian lenders to gain a foothold in the booming consumer credit market, he said. Deutsche Bank, Barclays and HSBC have all recently outlined plans to enter the retail market.
“The market is substantively quite liberal in terms of foreign banks’ participation,” said Jennings.
“The global banks have not had the strategic commitment until now. They underestimated the opportunity and now they are paying for it.”
Investment banking was the most developed industry in Moscow, he said, with 37 companies, at the last count, scrabbling for clients.
A war for talent has been under way for a year and Renaissance has played its part. Recent hires include Petri Kivinen, global head of debt capital markets at Dresdner Kleinwort in London, Gordon McCulloch, co-head of Goldman Sachs’ Moscow office, and Richard Bruens, head of investor relations at ABN Amro.
“There are a lot of open cheque books out there and I don’t think paying a lot is enough to retain people in any environment – and certainly not in a really hot environment,” said Jennings.
Renaissance’s investment bank has more than 1,000 employees in Moscow and Jennings claims to have lost only one director to a rival over the past two years.
Renaissance is a private partnership and more than 100 employees own a stake in it. Employees who leave receive the book value of their stock which, while significant (it is valued at $1bn), does not represent its likely market value. Jennings owns 80% of the business, a stake that has been valued by bankers at between $3bn and $4bn.
Jennings is not concerned that forthcoming elections will affect his business adversely and, like many of Moscow’s leading bankers, he diplomatically refuses to be drawn into backing a successor to President Putin.
He said: “Putin brought a much-needed degree of stability when we had a large measure of anarchy. The name of the game now is going to be continuity: continuity politically and a high degree of continuity in terms of how the economy is developing.”
• Rencap’s strategy presents a strong case for joint venture
Rencap’s growth strategy is based on exporting its Russian business model to other emerging markets and developing alliances with leaders in other fields.
Jennings said Renaissance plans to increase the investment banking services it offers in frontier markets, having set up in sub-Saharan Africa and CIS countries including Kazakhstan and Ukraine. The bank is also expected to announce details of an infrastructure joint venture with Australian banking group Macquarie.
Jennings said going it alone was not an option for Renaissance. He said: “Unlike equity capital markets where we can create scale to have the best sales and best capital market professionals, it is very questionable that a go-it-alone model is efficient if you want to be strong in infrastructure. There is a strong case for us to team up with somebody – I think infrastructure is going to be one of the next big developments in Russia.”
The bank has an investment banking joint venture with the Royal Bank of Scotland and an informal M&A tie-up with Lehman Brothers. The latter is strengthening its Moscow operation and has recruited leading rainmaker Nick Jordan from Deutsche Bank to spearhead its push,
Denying this would jeopardise the alliance, Jennings said: “When Nick was running Deutsche, Renaissance used to do a lot of business with them. We would see Nick joining Lehman as a positive and certainly not a negative. There is some overlap but in terms of resources on the ground and critical mass, there is not much overlap.”
Rencap will limit the number of alliances it entered into, according to Jennings. He said: “You can’t do a lot of alliances. How many best friends can you have? You can only have a small number. The RBS joint venture in derivatives gives us a leading position in a market that we would otherwise be a two-bit player in.”
Jennings said the bank has a billion dollars invested in its sub-Saharan projects focused on Nigeria and Kenya. “We have a big challenge in Africa over the next 12 months but we don’t rule out looking at other markets.” Renaissance has no plans to sell to a rival or to float the company, despite its successes floating other Russian businesses.
Jennings, who set up Rencap in 1995 with a Credit Suisse colleague Boris Jordan, has rebuffed interest in the business from western banks and state-owned VTB. He said selling, as rival brokerages Brunswick and UFG have, would ruin Rencap’s reputation for providing clients with impartial and independent services.
He said: “It would be very damaging and what you sold would be slightly damaged by the time you sold it.
“By virtue of the sale process, you would lose something. We have seen that has happened in the market here.”
Jason Corcoran in Moscow
30 July 2007
Stephen Jennings, founder of Russian investment bank Renaissance Capital keeps the faith in his new country
It’s clear Moscow is going to be a major capital market
Stephen Jennings, founder of Russia’s Renaissance Capital, may spend as much time in Nairobi expanding the bank’s sub-Saharan operations as in Moscow but he is not betting against the domestic market just yet.
The billionaire, one of two foreign oligarchs in Russia, made his fortune by keeping faith in the country and his investment banking business, which both came close to collapse after the financial crisis of 1998.
Having seen that out, the New Zealander is unlikely to pack his bags for home soon. Nor is he sitting on his laurels, having seen Renaissance break into the top 10 global underwriters of initial public offerings for the first time last month.
Jennings envisages Moscow becoming Europe’s second financial capital behind London, overhauling Frankfurt, Paris and Milan within 15 years.
He said: “It’s clear Moscow is going to be a major capital market. It already is in new issuance and overall market capitalisation. Imagine what’s going to happen with another 10 years of capital accumulation, and how big the domestic capital markets will be.
“Mortgage markets, securitisations markets and derivative markets will be very big. It sounds strange but when you think about it, it’s totally logical.”
Russia has the biggest and most liquid stock market in the region by far, with a market capitalisation of more than a $1 trillion (€723bn). It turns over billions of dollars every day. Its companies were third in the world in terms of fundraising through IPOs in the first half of the year, outpacing the UK and Brazil, according to auditor Ernst & Young.
Jennings admitted that beyond equity issuance, Russia lags its rivals. In terms of foreign exchange trading, commodities, debt and derivatives, Moscow is not on the global radar, he said. But this is changing. Derivatives are now the fastest growing area of Russia’s financial sector as the scale and diversity of Russia’s asset base and securities markets drives its development.
Jennings said Moscow could become the focus of an emerging regional capital market, although it would have to compete with Warsaw, which has attracted several Ukrainian IPOs.
He added: “We will start to see elements of a pan-CIS capital market and it’s more likely than not to be centred on Moscow. When markets get to a certain size, political pressure for that harmonisation will get to be a lot greater. We will see pan-CIS investment banks, we will see pan-CIS commercial banks and that’s starting to happen now.”
Moscow forms a natural bridge between Asian and European markets. For it to develop as a financial hub, Jennings said more widespread equity ownership and growth in domestic pension funds, mutual funds and insurance funds would be needed. Renaissance’s own fund arm, Renaissance Investment Management, is Russia’s market leader and has grown rapidly to $4.5bn in assets under management.
Some signs are encouraging, such as May’s IPO by state-controlled bank VTB. It was the first meaningful allocation of shares to retail investors. More than 131,000 of them applied for stock valued at approximately $1.6bn.
Institutional reform is vital to developing Russian capital markets and Jennings noted its pace has slackened recently, compared to the rate of change in Kazakhstan and Ukraine.
He said: “Russia has been quite good at cutting tax rates or streamlining and simplifying but it hasn’t been very good, so far, at building strong institutions. There will be another phase of reform and then Russia will go through a phase of modernising its institutions. Some aspects of capital market development will have to wait for that phase.”
Jennings said lack of banking reform has hampered financial intermediation and efficiency in financial systems, but has not affected the participation of foreign banks in Russia.
Foreign banks, including France’s Société Générale and Belgium’s KBC Group, were snapping up Russian lenders to gain a foothold in the booming consumer credit market, he said. Deutsche Bank, Barclays and HSBC have all recently outlined plans to enter the retail market.
“The market is substantively quite liberal in terms of foreign banks’ participation,” said Jennings.
“The global banks have not had the strategic commitment until now. They underestimated the opportunity and now they are paying for it.”
Investment banking was the most developed industry in Moscow, he said, with 37 companies, at the last count, scrabbling for clients.
A war for talent has been under way for a year and Renaissance has played its part. Recent hires include Petri Kivinen, global head of debt capital markets at Dresdner Kleinwort in London, Gordon McCulloch, co-head of Goldman Sachs’ Moscow office, and Richard Bruens, head of investor relations at ABN Amro.
“There are a lot of open cheque books out there and I don’t think paying a lot is enough to retain people in any environment – and certainly not in a really hot environment,” said Jennings.
Renaissance’s investment bank has more than 1,000 employees in Moscow and Jennings claims to have lost only one director to a rival over the past two years.
Renaissance is a private partnership and more than 100 employees own a stake in it. Employees who leave receive the book value of their stock which, while significant (it is valued at $1bn), does not represent its likely market value. Jennings owns 80% of the business, a stake that has been valued by bankers at between $3bn and $4bn.
Jennings is not concerned that forthcoming elections will affect his business adversely and, like many of Moscow’s leading bankers, he diplomatically refuses to be drawn into backing a successor to President Putin.
He said: “Putin brought a much-needed degree of stability when we had a large measure of anarchy. The name of the game now is going to be continuity: continuity politically and a high degree of continuity in terms of how the economy is developing.”
• Rencap’s strategy presents a strong case for joint venture
Rencap’s growth strategy is based on exporting its Russian business model to other emerging markets and developing alliances with leaders in other fields.
Jennings said Renaissance plans to increase the investment banking services it offers in frontier markets, having set up in sub-Saharan Africa and CIS countries including Kazakhstan and Ukraine. The bank is also expected to announce details of an infrastructure joint venture with Australian banking group Macquarie.
Jennings said going it alone was not an option for Renaissance. He said: “Unlike equity capital markets where we can create scale to have the best sales and best capital market professionals, it is very questionable that a go-it-alone model is efficient if you want to be strong in infrastructure. There is a strong case for us to team up with somebody – I think infrastructure is going to be one of the next big developments in Russia.”
The bank has an investment banking joint venture with the Royal Bank of Scotland and an informal M&A tie-up with Lehman Brothers. The latter is strengthening its Moscow operation and has recruited leading rainmaker Nick Jordan from Deutsche Bank to spearhead its push,
Denying this would jeopardise the alliance, Jennings said: “When Nick was running Deutsche, Renaissance used to do a lot of business with them. We would see Nick joining Lehman as a positive and certainly not a negative. There is some overlap but in terms of resources on the ground and critical mass, there is not much overlap.”
Rencap will limit the number of alliances it entered into, according to Jennings. He said: “You can’t do a lot of alliances. How many best friends can you have? You can only have a small number. The RBS joint venture in derivatives gives us a leading position in a market that we would otherwise be a two-bit player in.”
Jennings said the bank has a billion dollars invested in its sub-Saharan projects focused on Nigeria and Kenya. “We have a big challenge in Africa over the next 12 months but we don’t rule out looking at other markets.” Renaissance has no plans to sell to a rival or to float the company, despite its successes floating other Russian businesses.
Jennings, who set up Rencap in 1995 with a Credit Suisse colleague Boris Jordan, has rebuffed interest in the business from western banks and state-owned VTB. He said selling, as rival brokerages Brunswick and UFG have, would ruin Rencap’s reputation for providing clients with impartial and independent services.
He said: “It would be very damaging and what you sold would be slightly damaged by the time you sold it.
“By virtue of the sale process, you would lose something. We have seen that has happened in the market here.”
Oligarch expects adopted homeland to blossom
Financial News: Focus on Russia
Jason Corcoran in Moscow
30 July 2007
Stephen Jennings, founder of Russian investment bank Renaissance Capital keeps the faith in his new country
It’s clear Moscow is going to be a major capital market
Stephen Jennings, founder of Russia’s Renaissance Capital, may spend as much time in Nairobi expanding the bank’s sub-Saharan operations as in Moscow but he is not betting against the domestic market just yet.
The billionaire, one of two foreign oligarchs in Russia, made his fortune by keeping faith in the country and his investment banking business, which both came close to collapse after the financial crisis of 1998.
Having seen that out, the New Zealander is unlikely to pack his bags for home soon. Nor is he sitting on his laurels, having seen Renaissance break into the top 10 global underwriters of initial public offerings for the first time last month.
Jennings envisages Moscow becoming Europe’s second financial capital behind London, overhauling Frankfurt, Paris and Milan within 15 years.
He said: “It’s clear Moscow is going to be a major capital market. It already is in new issuance and overall market capitalisation. Imagine what’s going to happen with another 10 years of capital accumulation, and how big the domestic capital markets will be.
“Mortgage markets, securitisations markets and derivative markets will be very big. It sounds strange but when you think about it, it’s totally logical.”
Russia has the biggest and most liquid stock market in the region by far, with a market capitalisation of more than a $1 trillion (€723bn). It turns over billions of dollars every day. Its companies were third in the world in terms of fundraising through IPOs in the first half of the year, outpacing the UK and Brazil, according to auditor Ernst & Young.
Jennings admitted that beyond equity issuance, Russia lags its rivals. In terms of foreign exchange trading, commodities, debt and derivatives, Moscow is not on the global radar, he said. But this is changing. Derivatives are now the fastest growing area of Russia’s financial sector as the scale and diversity of Russia’s asset base and securities markets drives its development.
Jennings said Moscow could become the focus of an emerging regional capital market, although it would have to compete with Warsaw, which has attracted several Ukrainian IPOs.
He added: “We will start to see elements of a pan-CIS capital market and it’s more likely than not to be centred on Moscow. When markets get to a certain size, political pressure for that harmonisation will get to be a lot greater. We will see pan-CIS investment banks, we will see pan-CIS commercial banks and that’s starting to happen now.”
Moscow forms a natural bridge between Asian and European markets. For it to develop as a financial hub, Jennings said more widespread equity ownership and growth in domestic pension funds, mutual funds and insurance funds would be needed. Renaissance’s own fund arm, Renaissance Investment Management, is Russia’s market leader and has grown rapidly to $4.5bn in assets under management.
Some signs are encouraging, such as May’s IPO by state-controlled bank VTB. It was the first meaningful allocation of shares to retail investors. More than 131,000 of them applied for stock valued at approximately $1.6bn.
Institutional reform is vital to developing Russian capital markets and Jennings noted its pace has slackened recently, compared to the rate of change in Kazakhstan and Ukraine.
He said: “Russia has been quite good at cutting tax rates or streamlining and simplifying but it hasn’t been very good, so far, at building strong institutions. There will be another phase of reform and then Russia will go through a phase of modernising its institutions. Some aspects of capital market development will have to wait for that phase.”
Jennings said lack of banking reform has hampered financial intermediation and efficiency in financial systems, but has not affected the participation of foreign banks in Russia.
Foreign banks, including France’s Société Générale and Belgium’s KBC Group, were snapping up Russian lenders to gain a foothold in the booming consumer credit market, he said. Deutsche Bank, Barclays and HSBC have all recently outlined plans to enter the retail market.
“The market is substantively quite liberal in terms of foreign banks’ participation,” said Jennings.
“The global banks have not had the strategic commitment until now. They underestimated the opportunity and now they are paying for it.”
Investment banking was the most developed industry in Moscow, he said, with 37 companies, at the last count, scrabbling for clients.
A war for talent has been under way for a year and Renaissance has played its part. Recent hires include Petri Kivinen, global head of debt capital markets at Dresdner Kleinwort in London, Gordon McCulloch, co-head of Goldman Sachs’ Moscow office, and Richard Bruens, head of investor relations at ABN Amro.
“There are a lot of open cheque books out there and I don’t think paying a lot is enough to retain people in any environment – and certainly not in a really hot environment,” said Jennings.
Renaissance’s investment bank has more than 1,000 employees in Moscow and Jennings claims to have lost only one director to a rival over the past two years.
Renaissance is a private partnership and more than 100 employees own a stake in it. Employees who leave receive the book value of their stock which, while significant (it is valued at $1bn), does not represent its likely market value. Jennings owns 80% of the business, a stake that has been valued by bankers at between $3bn and $4bn.
Jennings is not concerned that forthcoming elections will affect his business adversely and, like many of Moscow’s leading bankers, he diplomatically refuses to be drawn into backing a successor to President Putin.
He said: “Putin brought a much-needed degree of stability when we had a large measure of anarchy. The name of the game now is going to be continuity: continuity politically and a high degree of continuity in terms of how the economy is developing.”
• Rencap’s strategy presents a strong case for joint venture
Rencap’s growth strategy is based on exporting its Russian business model to other emerging markets and developing alliances with leaders in other fields.
Jennings said Renaissance plans to increase the investment banking services it offers in frontier markets, having set up in sub-Saharan Africa and CIS countries including Kazakhstan and Ukraine. The bank is also expected to announce details of an infrastructure joint venture with Australian banking group Macquarie.
Jennings said going it alone was not an option for Renaissance. He said: “Unlike equity capital markets where we can create scale to have the best sales and best capital market professionals, it is very questionable that a go-it-alone model is efficient if you want to be strong in infrastructure. There is a strong case for us to team up with somebody – I think infrastructure is going to be one of the next big developments in Russia.”
The bank has an investment banking joint venture with the Royal Bank of Scotland and an informal M&A tie-up with Lehman Brothers. The latter is strengthening its Moscow operation and has recruited leading rainmaker Nick Jordan from Deutsche Bank to spearhead its push,
Denying this would jeopardise the alliance, Jennings said: “When Nick was running Deutsche, Renaissance used to do a lot of business with them. We would see Nick joining Lehman as a positive and certainly not a negative. There is some overlap but in terms of resources on the ground and critical mass, there is not much overlap.”
Rencap will limit the number of alliances it entered into, according to Jennings. He said: “You can’t do a lot of alliances. How many best friends can you have? You can only have a small number. The RBS joint venture in derivatives gives us a leading position in a market that we would otherwise be a two-bit player in.”
Jennings said the bank has a billion dollars invested in its sub-Saharan projects focused on Nigeria and Kenya. “We have a big challenge in Africa over the next 12 months but we don’t rule out looking at other markets.” Renaissance has no plans to sell to a rival or to float the company, despite its successes floating other Russian businesses.
Jennings, who set up Rencap in 1995 with a Credit Suisse colleague Boris Jordan, has rebuffed interest in the business from western banks and state-owned VTB. He said selling, as rival brokerages Brunswick and UFG have, would ruin Rencap’s reputation for providing clients with impartial and independent services.
He said: “It would be very damaging and what you sold would be slightly damaged by the time you sold it.
“By virtue of the sale process, you would lose something. We have seen that has happened in the market here.”
Wednesday, 27 June 2007
Russia's Renaissance expands into Middle East and Southeast Asia
Business New Europe
Jason Corcoran in Moscow
2007-06-26
Russian investment bank Renaissance Capital is opening offices in Dubai, Singapore and Hong Kong to service its fast growing wealth and asset management business, bne has learnt.
Its expansion overseas is underpinned by a conviction that Russian private investors will want to diversify their portfolios and invest more abroad amid uncertainty ahead of next year's presidential election.
Stephen Jennings, chief executive of Renaissance Capital, says the Asian openings stemmed from existing Russian and CIS clients demanding access to key international finance markets.
In an interview with bne, Jennings said that clients within Russia and the CIS want international assets, and international custodian and wealth management services.
"As we go into other geographies, we will sell those same products to local clients in those markets also. It's about giving really tailored wealth management products to high net worth Russians, Ukrainians, Kazakhs and so forth," he said.
Renaissance's fund arm Renaissance Investment Management is Russia's market leader with almost $4.5bn in assets under management. Jennings said more than half of assets were accounted for by high net worth clients.
Domestically, Jennings welcomed the arrival of global wealth management players to Moscow, but suggested their strategy might not be best suited to Russia's ultra rich.
"UBS and Credit Suisse are tailored towards a global business. They would say otherwise, but their product is quite standardised. What we are dealing with in Russia is a completely new class of wealthy people. They are used to exceptionally high levels of service in other areas of their lives. They are not getting that highly tailored and high-end service from someone who is a generic wealth provider," he said.
UBS launched limited onshore private banking services in Russia in January, hot on the heels of Credit Suisse which launched in September last year. Other competitors in the onshore market include market leaders Deutsche Bank, Citigroup and Austria's Raiffeisen. UBS is offering wealth management, asset management, ruble fixed-income and foreign-exchange services alongside their existing Russian operations in equities and investment banking.
Jennings argues Renaissance can provide clients with a higher level of service along with best-of-breed products through white-labelling - the selling of externally managed funds that are branded as its own.
"It's not an option for us to give people anything but a Rolls-Royce service," he said. "International products are all available through white-labelling and open architecture so there is nothing by way of product that an international bank can provide that we can't. What we can do that is different is the tailoring of products, including domestic products, the location of service and the whole nature of the relationship."
Africa and elsewhere
The bank is targeting the top segment of the market and clients with a minimum investment size of $1m. Actually, the average account size is in excess of this, at over $6m, while the largest single account is just above $100m.
Renaissance recently launched its investment bank in Sub-Saharan Africa. Asset management and wealth management services will follow in time, according to Jennings.
The move to set up operations in Asia and the Middle East follows the recent launch of operations in Geneva, the backyard of the Swiss wealth management giants.
Philippe Magistretti, head of private banking at Swiss bank Union Bancaire Privee, has been hired to run the business. Magistretti joined UBP in 2004 from Lazard Freres, where he was a partner. He was previously head of the French derivatives operation for the US insurance giant American International Group. His new title is chief executive of Renaissance Investment Management Switzerland.
Renaissance has received a Swiss banking license and is looking to increase its headcount in Geneva from six to 15 by December.
Both Jennings and his deputy Neil Harvey insist Renaissance's overseas expansion is not a hedge against Russia.
"We are 110% focused on Russia," said Harvey. "We have a unique model suited to frontier-type capital which we are applying elsewhere."
www.businessneweurope.eu
Jason Corcoran in Moscow
2007-06-26
Russian investment bank Renaissance Capital is opening offices in Dubai, Singapore and Hong Kong to service its fast growing wealth and asset management business, bne has learnt.
Its expansion overseas is underpinned by a conviction that Russian private investors will want to diversify their portfolios and invest more abroad amid uncertainty ahead of next year's presidential election.
Stephen Jennings, chief executive of Renaissance Capital, says the Asian openings stemmed from existing Russian and CIS clients demanding access to key international finance markets.
In an interview with bne, Jennings said that clients within Russia and the CIS want international assets, and international custodian and wealth management services.
"As we go into other geographies, we will sell those same products to local clients in those markets also. It's about giving really tailored wealth management products to high net worth Russians, Ukrainians, Kazakhs and so forth," he said.
Renaissance's fund arm Renaissance Investment Management is Russia's market leader with almost $4.5bn in assets under management. Jennings said more than half of assets were accounted for by high net worth clients.
Domestically, Jennings welcomed the arrival of global wealth management players to Moscow, but suggested their strategy might not be best suited to Russia's ultra rich.
"UBS and Credit Suisse are tailored towards a global business. They would say otherwise, but their product is quite standardised. What we are dealing with in Russia is a completely new class of wealthy people. They are used to exceptionally high levels of service in other areas of their lives. They are not getting that highly tailored and high-end service from someone who is a generic wealth provider," he said.
UBS launched limited onshore private banking services in Russia in January, hot on the heels of Credit Suisse which launched in September last year. Other competitors in the onshore market include market leaders Deutsche Bank, Citigroup and Austria's Raiffeisen. UBS is offering wealth management, asset management, ruble fixed-income and foreign-exchange services alongside their existing Russian operations in equities and investment banking.
Jennings argues Renaissance can provide clients with a higher level of service along with best-of-breed products through white-labelling - the selling of externally managed funds that are branded as its own.
"It's not an option for us to give people anything but a Rolls-Royce service," he said. "International products are all available through white-labelling and open architecture so there is nothing by way of product that an international bank can provide that we can't. What we can do that is different is the tailoring of products, including domestic products, the location of service and the whole nature of the relationship."
Africa and elsewhere
The bank is targeting the top segment of the market and clients with a minimum investment size of $1m. Actually, the average account size is in excess of this, at over $6m, while the largest single account is just above $100m.
Renaissance recently launched its investment bank in Sub-Saharan Africa. Asset management and wealth management services will follow in time, according to Jennings.
The move to set up operations in Asia and the Middle East follows the recent launch of operations in Geneva, the backyard of the Swiss wealth management giants.
Philippe Magistretti, head of private banking at Swiss bank Union Bancaire Privee, has been hired to run the business. Magistretti joined UBP in 2004 from Lazard Freres, where he was a partner. He was previously head of the French derivatives operation for the US insurance giant American International Group. His new title is chief executive of Renaissance Investment Management Switzerland.
Renaissance has received a Swiss banking license and is looking to increase its headcount in Geneva from six to 15 by December.
Both Jennings and his deputy Neil Harvey insist Renaissance's overseas expansion is not a hedge against Russia.
"We are 110% focused on Russia," said Harvey. "We have a unique model suited to frontier-type capital which we are applying elsewhere."
www.businessneweurope.eu
Wednesday, 13 June 2007
Renaissance Capital Reveals Global Wealth Management Ambitions
Wealth Briefing
June 12, 2007
Jason Corcoran in Moscow
Renaissance Capital, the Russian investment bank, is planning to open offices in Dubai, Singapore and Hong Kong to service its fast growing wealth and asset management business.
Its expansion overseas is underpinned by a conviction that Russian private investors will want to diversify their portfolios and invest more abroad amid uncertainty ahead of next year's presidential election.
The move to set up operations in Asia and the Middle East follows the opening of an operation in Geneva, as revealed by WealthBriefing in April.
Stephen Jennings, the chief executive of Renaissance Capital, said the push overseas stemmed from existing Russian and CIS clients demanding access to international financial markets.
In an exclusive interview with WealthBriefing, he said: "Clients within Russia and CIS want international assets, international custodian and wealth management services. As we go into other geographies, we will sell those same products to local clients in those markets also. It's about giving really tailored wealth management products to high networth Russians, Ukrainians, Kazakhs and so forth."
Renaissance's fund arm Renaissance Investment Management is Russia's market leader with almost $4.5 billion in assets under management. Jennings said more than half of assets were accounted for by high net worth clients.
Domestically, Mr Jennings welcomed the arrival of global wealth management players but suggested their strategy might not hit the mark.
He said: "UBS and Credit Suisse are tailored towards a global business. They would say otherwise but their product is quite standardised. What we are dealing with in Russia is a completely new class of wealthy people. They are used to exceptionally high levels of service in other areas of their lives. They are not getting that highly tailored and high-end service from someone who is a generic wealth provider."
Mr Jennings argued Renaissance can provide a both high end service to its clients and the best products through white-labelling.
He added: "It's not a option for us to give people anything but Rolls-Royce service. International products are all available through white-labelling and open architecture so there is nothing by way of product that an international bank can provide that we can't. What we can do that is different is the tailoring of products, including domestic products, the location of service and the whole nature of the relationship."
Renaissance said it provides clients with a high level of service, an individual approach and flexibility in the management of their investment such as a no redemptions fee policy.
The company targets the top segment of the market and clients with a minimum investment size of $1 million. Actually, the average account size is in excess of this, at over $6 million, while the largest single account is just above $100 million.
Mr Jennings left CSFB to launch Renaissance Capital in 1995 and took control of the firm in the turmoil following the Russian debt crisis in 1998.
He has since transformed Renaissance into Russia 's first full service western-style investment bank and it has since gone from strength to strength, riding the wave of foreign investor interest in the country.
Mr Jennings, who has a controlling stake in the business rumoured to be worth $2 billlion, has rebuffed interest in his business from Western banks and state-owned VTB. He has said selling out would ruin the bank's reputation for providing clients impartial and independent services.
Renaissance recently launched its investment bank in Sub-Saharan Africa. Asset management and wealth management services will follow in time, according to Mr Jennings.
www.wealthbriefing.com
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