Russia the best of the BRICs: Rencap's Jennings

Russia is the most attractive of the so-called BRIC markets, and political risk is concentrated in the West and not there, Steven Jennings, CEO of investment bank Renaissance Capital, said on Friday. In the longer term, the markets of Africa offer the greatest growth potential, said Jennings, who has reprofiled Renaissance as a pan-emerging markets investment bank.
"Out of the BRICs from a value perspective, I think Russia stands out, N" Jennings told Reuters Insider television in an interview at the St Petersburg International Economic Forum, referring to the quartet of Brazil, Russia, India and China. "Investors have done the normal thing at this stage of the cycle and got the sulks about structural issues in Russia. I think that's overdone. From the short-term perspective asset prices are cheap here." Jennings, a New Zealander, founded Renaissance Capital in 1995 as a Russia-based investment bank but has in recent years pushed aggressively into markets such as Sub-Saharan Africa. Rencap now owns the No 3 brokerage in South Africa.
"Long term it's obviously Africa - Africa is going to be the fastest growing region in the world, even the IMF is saying that now, and that certainly isn't priced in," Jennings said. Jennings said its cross-emerging markets focus offered huge potential growth for Renaissance Capital as it seeks to capture trading and deal flows. "The whole model has changed," he said. "The idea of being a Russian investment bank is a defunct concept. There's no such thing as a German investment bank - Deutsche Bank is a global business.
"If we want to dominate trading flows with our global counterparties, if we want to undertake cross-border M&A, we have to work across a large number of emerging markets. Our pan-EMEA market share has risen very considerably." Renaissance sold a stake to Russian oligarch Mikhail Prokhorov's Onexim group in 2009 after it took a big hit from the financial crisis.
After the takeover this year of Troika Dialog by Sberbank, it is the last sizeable independent investment bank based in Moscow, and Jennings has no plans to change that. "We are very happy being private. We see a lot of growth. We continue to build businesses around the investment banking platform," he said. Asked about political risk, a major talking point at the St Petersburg forum, Jennings said he saw greater dangers in the West than in Russia. "I think the main risks in the world are in the West, the economic problems in the world are in the West," he said. "All the growth in the world is in emerging markets.