Russia’s Renaissance Capital Plans Expansion in East Africa as IPOs Rise

Renaissance Capital, the Russian brokerage half-owned by billionaire Mikhail Prokhorov, said it will open an office in Rwanda as the number of initial public offerings in the East African nation increases.

RenCap, as the Moscow-based company is known, was a transaction adviser in the December IPO of Brassieries et Limonaderies du Rwanda SA, the Rwandan unit of Heineken NV (HEIA), and the sale of shares by Bank of Kigali Ltd., Rwanda’s biggest lender by assets, which closed last month.

“We are bound to see more in the next few months,” Patrick Mweheire, RenCap’s chief executive officer for East Africa, said in an interview yesterday in Nairobi, the Kenyan capital. “We are going to open an office in Kigali by the end of this year; we are already looking for space.”

Rwanda’s government plans to sell shares in six companies over the next three years as part of a plan to attract foreign investors, the country’s regulator, the Capital Market Advisory Council, said in April. Among the companies preparing to list are MTN Rwanda, a unit of MTN Group Ltd. (MTN), Africa’s biggest mobile-phone company; Commercial Bank of Rwanda; Sonarwa Insurance and other businesses partly owned by the government.

The three companies that trade on the Rwanda Stock Exchange are Bralirwa, as the Heinken unit is known, Nation Media Group Ltd. (NMG), East Africa’s biggest media company, and KCB Rwanda Ltd., a unit of Kenya Commercial Bank Ltd. (KNCB) The latter two were cross- listed from the Nairobi Stock Exchange in November 2010 and June 2009 respectively.

Economic Growth

Rwanda doubled the size of its economy in the nine years to 2010 as it recovers from a genocide in which 800,000 mainly ethnic Tutsis died in 1994. Growth this year may exceed the government’s 7 percent forecast because of improved grain output and rising export revenue, central bank Governor Claver Gatete said Aug. 9.

“So far everything is very predictable in Rwanda, mostly because of the political system put in place by President Paul Kagame,” Ben Nyamweya, an analyst at Nairobi-based Isis Kenya Investment Management Ltd. said in a phone interview today. Still, the lack of a clear successor and the threat of a global economic slowdown do pose risks, he said.

Regional Expansion

RenCap, whose East African headquarters is in Nairobi, became the third-biggest investment bank by value of transactions in Kenya in the first half of this year, compared with 13th a year earlier, Mweheire said. Net income grew to 173 million shillings ($1.86 million), compared with a loss of 34 million shillings a year earlier, as brokerage revenue surged 80 percent, he said.

“We have made a concerted effort to build our brokerage business,” Mweheire said. “On the investment banking side, there hasn’t been an IPO in Kenya since 2008 so we made an effort to build a regional business.”

The company is considering opening an office in Kampala, the capital of neighboring Uganda, next year, he said.

Renaissance bid 251 million shillings for a Kenyan stock- broking license in August 2007. The permit was previously owned by Francis Thuo & Partners Ltd., a Kenyan brokerage declared insolvent in March 2007.

RenCap is a transaction adviser for the initial public offering of Onatel, the state-owned Burundian fixed-line and mobile-phone company, and the sale of shares in a bank in the Democratic Republic of Congo, Mweheire said. He didn’t provide further details.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net.

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