Business
Moscow's RenCap Builds Emerging Market Empire
By Melissa Akin, Reuters 16/7/08
Jul 20, 2008 - 5:59:06 AM

Few of the world's bankers have the luxury of raising headcount this year, but the head of Russian investment bank Renaissance Capital is boosting his staff by 20 percent.

"We cut our growth plans headcount-wise from 60 percent to 20 percent," Renaissance Capital CEO Alexander Pertsovsky told Reuters in an interview in his glass-walled office on the 51st floor of one of the first of Moscow's new skyscrapers.

>From the complex which will house Europe's tallest building, Pertsovsky's office surveys the vast Moscow cityscape, but his bank's sights are set on growing business in Africa, a possible foray into Egypt and, nearer home, the ex-Soviet states of Central Asia.

Renaissance doubled its staff in 2006 and again in 2007, using the proceeds of a Russian stock market and M&A boom to expand in markets where Wall Street might fear to tread.

This year, Pertsovsky is adding 40-50 people to a 50-strong operation in Lagos, where his bank's investment case plays on similarities to the Brazil-Russia-India-China quartet of high-growth, large-scale emerging markets.

The bank is plotting its next move on the African continent, although Pertsovsky said he wanted to consolidate his position in Lagos and Kenya, his other African base, first.

"Egypt is definitely one to consider," he said.

And Renaissance may try to capitalise on the Soviet Union's Cold War presence in Angola, the legacy of which is "a really good attitude toward Russia," he said. South Africa will not be on the list because it is "overbroked and overbanked".

Pertsovsky sees an opportunity to position Russia in resource-rich African states as a counterweight to energy-hungry China. "They need someone to balance the Chinese. People on the ground realise they want to have several suitors, not just one," he said.

INTERMEDIARY OF CAPITAL

"We thought we would try to intermediate capital between China and Africa, but we thought about it a little bit more and we would rather intermediate flows between Russia and Africa and the CIS and Africa," he said.

"We do understand our main business is here and it's going to stay here. Our view of the Russian capital markets is extremely bullish and I think our strength is being in this region and having this home base."

Closer to home, Pertsovsky identified the former Soviet republics of Azerbaijan and Uzbekistan as the next to take off. An oil boom helped Azerbaijan become one of the world's fastest-growing economies last year while Uzbekistan has Central Asia's largest population.

"If you talk about two years, that's Azerbaijan. If you talk about five years, it's probably Uzbekistan as well," he said.

"There is a market there. The market cap of Uzbekistan, of the companies that trade, is $2.5 billion, maybe $3 billion. So it is clear that whatever you buy now is something that can be worth 10 times more on a medium-term basis. The country has all the potential of being a big market."

Georgia, he said, was too small to be of interest but Belarus, accused by the West of running a Soviet-style command economy, was a "big unknown".

Renaissance, which advised on some of Russia's first forays into international M&A, said capital flows between emerging markets would only increase.

"You have much more intermediation of capital not just between the West and emerging markets, and you have it within the emerging markets universe," he said.

The bank was an early proponent of Moscow as a new major financial centre, although Pertsovsky acknowledged that Moscow is not the only oil capital competing for the title.

"It will become a centre. It's just a question of how big a centre in relation to Dubai," he said.

The road to the top tier of world financial centres can be literally a rough one -- a central investment theme for the bank this year is the need to spend billions renewing Soviet-era infrastructure.

To prove this point, Renaissance is launching a roughly $1.5 billion infrastructure fund with Australian bank Macquarie

"You have to be able to get to Moscow easily, you have to be able to get out of Moscow easily, you have to be able to travel around Moscow easily," Pertsovsky said. "For me that is as important as legislation."
      

Source: Ocnus.net 2008