LONDON — Renaissance Capital is in the midst of a sweeping expansion into the resource sector in Africa, betting on a surge of deals between emerging and frontier markets sidelining traditional Western institutions.
RenCap plans to hire 200 people across its investment banking operations this year, boosting numbers by 25 percent to 30 percent, with many of them targeting mining and oil/gas sectors, deputy chief executive Andrew Cornthwaite said.
The investment bank will expand offices in Africa by 50 percent to 100 percent to as many as a dozen, adding further local expertise in a vast continent rich with minerals and oil, he added in an interview late Thursday.
"We think the days of people just sitting in London or New York waiting for the business to come to them are over," said Cornthwaite, also head of investment banking at RenCap.
The bank was one of the most active dealmakers in Africa last year, executing 18 transactions in 10 countries, including the sale of Central African Mining and Exploration Co. to Kazakh mining group ENRC for $955 million.
"There are five or six other transactions of that kind of magnitude, billion dollar-plus type trades. I don't know if they will close in the next quarter or even this year," he said.
Since it entered Africa in 2007, RenCap has scoured the continent for world-class assets to sell and has a strong pipeline that has sparked interest fr om Chinese and other emerging market buyers.
"When they do close, I don't know if the buyer is going to be Chinese. CAMEC for example. … That could have just as easily been the Brazilians or the Indians or the Chinese."
A key to RenCap's success in resources has been on-the-ground presence in Africa, linked to an expanding emerging markets network.
"We've done it the hard way, fr om having people in Lusaka, Harare, Lagos, Nairobi, Accra."
In February, an office was opened in Johannesburg, which will act as a hub on the continent.
The bank has also forged joint ventures with investment banks in India and Mongolia and has plans for further expansion in Asia, said Cornthwaite, previously with Credit Suisse before joining RenCap in 2005.
The strategy is based on a view that the flow of capital between emerging markets has only just started.
"The interlinking, interdependence of emerging markets between each other has happened without much of a political impetus. When politicians and countries wake up to what they're capable of doing … we think there's no obvious lim it to where it will go."
A good example of the future is the CAMEC deal.
"A Kazakh company buys a Congolese copper company using a Russian adviser. Wh ere does that leave the U.K. and U.S. banks?"
Resource listings have been dominated by London, Toronto and Sydney, but firms with African assets are also due to gravitate toward emerging markets such as Johannesburg and Hong Kong.
"It will be a big opportunity for Hong Kong. We're seeing it already with the Russians, and it will happen with the African countries as well," he said.
"We've got four or five more deals that are going to list in Hong Kong, coming out of Kazakhstan, Mongolia and Russia, in the next six months."
RenCap was a bookrunner for the flotation of United Company RusAl, in Hong Kong this year.
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