RenCap May Create Fixed-Income Unit for Sub-Saharan Africa

Renaissance Capital, the Russian investment bank controlled by billionaire Mikhail Prokhorov, is considering creating a fixed-income unit for sub-Saharan Africa as countries from Angola to Zambia tap bond markets.

“Fixed income is a real opportunity in sub-Saharan Africa,” Clifford Sacks, RenCap chief executive officer for the continent, said in a Nov. 6 interview in Johannesburg. “We’ll be looking at it in 2014 and the team could be based in London or Lagos.”

Sub-Saharan companies and nations, including Nigeria and Ghana, have sold bonds this year that were oversubscribed as investors seek to tap African growth rates surpassing those of developed markets. RenCap began operations in the region in 2006 and offers brokerage, equity research and merger and advisory services from Johannesburg, Nairobi and Lagos.

Credit Suisse Group AG said in May it had switched coverage of the fixed-income market in sub-Saharan Africa from London to Johannesburg as Switzerland’s second-largest bank seeks to derive 25 percent of its revenue from emerging markets by 2014. African bond issuance will be spurred by about $90 billion a year of infrastructure development over the next 10 years, Mason Cranswick, director of fixed income in emerging markets for Credit Suisse, said at the time.

RenCap also plans to start coverage of North Africa, focusing on key markets such as Egypt and Morocco, said Sacks.

“We’ll have this ready in the first half of 2014,” he said. “The analysts will be based in Johannesburg and London until the opportunity warrants them being on the ground.”

‘Adding Muscle’

RenCap, which has 79 employees in Africa and 13 more covering the continent from London, hired analyst Johann Pretorius from Citigroup Inc. to start mining coverage and Ahmed Motara from Deutsche Bank AG to begin property research.

“We’ve plugged the holes from attrition and we’ve been adding muscle -- we’ve beefed up our research significantly,” Sacks said. “Our emerging market and Africa strategies haven’t changed and we remain completely committed.”

RenCap is also hiring people from universities across Africa to train them for the company’s research, sales and trading activities, he said. The bank’s internal pool of talent will be used to fill many positions in the future, he said.

RenCap will announce a “whole series” of deals out of Africa, including initial public offerings, this quarter, Benjamin Samuels, global head of equity sales at the Moscow-based bank, said last month.

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