The boss of Renaissance arrives with a reputation — brooding, brainy, provocative, and by some estimates the world’s most important investment banker when it comes to emerging markets. He is also a maverick who has made and lost two fortunes in Russia, forked out millions in a difficult divorce, been propped up by a controversial oligarch and is now driving his business into Africa.
So imagine my surprise when Stephen Jennings turns out to be a quietly courteous Kiwi, once a civil servant at the New Zealand Treasury and an expert on privatisation.
“People like us join the dots,” he says, before describing how he splits his time between making money and “making a difference”.
He cites Tatu City, the Nairobi suburb which Renaissance is building for Kenya’s middle classes. “It is one of those happy situations where it all coincides. You make money and you make the world a better place. It’s the same as when I arrived in Russia.”
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Well, hang on. Jennings, in his early role as a World Bank adviser, was one of the architects of Russia’s original vouchers-for-assets scheme that privatised vast state businesses, and made a few individuals very rich. He liked it so much he stayed, and built his own banking empire there.
By 2008, his wealth was estimated at £2.5 billion — not for nothing was he known as the “Kiwi oligarch”. Then came the crash. His Moscow-based Renaissance Group is still powerful but is now backed by nickel billionaire Mikhail Prokhorov, who rescued Jennings’ investment bank — Renaissance Capital — by buying 50%.
Prokhorov was the billionaire charged with procuring prostitutes in the ski resort of Courchevel four years ago. He eventually received a full apology from the French authorities and the Légion d’Honneur, but it makes you wonder. How did a Kiwi civil servant end up as his partner?
Jennings, curling his tall frame into a chair in Renaissance’s City outpost, deflects that. “To be honest, Mike is controversial in quite a superficial way. As a businessman his reputation is very sound.”
Jennings’ own story is as remarkable. There are whispers of the extravagant Moscow parties he once held, the millions his recent divorce cost him and how tough he had to be building Renaissance in the 1990s, at a time when Russian businessmen were shooting their rivals.
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Has he ever been threatened? “Maybe on the odd occasion. But I was an intermediary; there was no capital market, so if you are creating the infrastructure for others to trade ... well, imagine if there is no plumbing system, the plumber is appreciated.”
Being a Kiwi helped, he adds. “The Americans find it very difficult to operate there. I didn’t bring any ideological baggage.”
Now his bank advises big multinationals — including BP, BHP Billiton and Nestlé — and Jennings, 50, still holds a majority share in the group’s other interests: financial services, asset management and private equity operations that own property, agriculture and forestry in Europe and Asia.
Dig too deep and Jennings can be difficult, however. He is eloquent on trends, guarded on the personal, and aggressive when challenged.
Colleagues say there are always warning signs: his eyes narrow, his chin juts, his “yes” becomes “yis”. Luckily for me, his group’s near-collapse in 2008 has softened his manner. “Remember,” says one of Jennings’ friends, “you are meeting a man who’s recently been kicked in the nuts.”
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That blow, tempered by Prokhorov’s bailout, was the second time Renaissance had teetered. Russia’s bond crash in 1996 almost broke it too. Now Jennings is rebuilding the group with a new focus: Africa.
He claims the continent is poised to repeat the astonishing growth seen in Asia over recent decades. And his investors, mainly Russian, are keen to back his judgment. The problem for us in the West, he says, is that we are too prejudiced to see what’s coming.
“If you spend a lot of time in London, you see emerging markets from a very western perspective. When you are out there, it looks very different.”
And Jennings is out there, opening offices across Africa, backing infrastructure projects and aiming to establish Renaissance as the continent’s No1 investment bank. He is withering about banking giants and multinationals treading warily. To succeed in the new world, you must be local.
“The era of colonial capitalism is finished. The world we used to live in — where if you wanted toothpaste, razor blades or to get a loan, you had to go to a western organisation — is tipped on its head. The fastest-growing businesses are local businesses.”
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Jennings, of course, has an African fund to sell, but he already has offices in Nigeria, Ghana, Kenya, Zambia, Zimbabwe and South Africa. Miles Morland, a SAB Miller director and an old Africa hand, says the continent was an “investment banking desert” until Jennings turned up.
“The big western investment banks were too greedy and short term to get involved, and the South Africans were too scared. This left a vacuum that Stephen has done a great job of filling.”
Jennings says his career path, starting as an economist, then building his own investment bank as Russia changed radically, gives him a different perspective. His upbringing on a small farm in rural Taranaki, on New Zealand’s North Island, also played a part.
Workmates say his approach is abrasively direct but appreciated in Moscow. “Russian wham-bam,” says one.
Another, Johnny Beveridge, former head of equities at Renaissance Capital, says Jennings runs his operation like a rugby team. “If you throw yourself in front of the opposition, you’re on the team.”
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That hasn’t stopped Jennings downsizing fast twice, but he bounced back. Now he says the shift of power to the East is coming so quickly that London will soon be floundering.
“Emerging markets are integrating and disintermediating the western capital markets. Big natural resources projects are being bought by the Chinese, Indians, Kazakhs — their participation dwarfing that of western multinationals. Hong Kong will supersede London as the main capital markets centre for emerging economies in three years.”
But won’t western globalised firms dominate all? He shakes his head.
“Look at the biggest banks from 15 years ago. It’s a different list to now, and the fastest-growing banks in Africa are local. Look at consumer segments. Russia has six or seven multi-billion-dollar turnover supermarket chains — Walmart and Tesco don’t have a branch. A similar thing is happening in China.”
In short, the advantages of multinationals are fewer, the advantages of locals are greater. As for worries about instability, corruption and poverty...
“The African story has already been told by Asia. Thirty-five years ago Asia was the poorest continent, had the most conflicts, the worst life expectancy, and few expected that to change. Now look at it.”
He throws out a flurry of statistics. “Ethiopia has grown almost as fast as China since 2000. Africa was the only continent that didn’t have a single quarter of negative growth in 2009. I could go on and on.”
The upshot of western scepticism, he argues, is that early investors will profit. “The opportunity in Africa is nowhere close to being priced in. In that sense there is a short-term free lunch for investors.”
But that’s been said for years. How can he justify working in dictator-led regimes such as Zimbabwe? “Because capital markets are a huge force for change,” says Jennings. And Zimbabwe’s opposition is “crying out for us to be there”.
And if he is so smart, how come his business has been on the rack? Because, he says, we live in an era of change, and big change brings with it big periodic shocks. “You can be right on the trends but if you are on the wrong end of the shocks, like we were in 2008, it’s not going to help you very much.”
He looks mournful for a second. Would he move to Britain? “No, I’m just here to see the kids.” His former wife lives in Oxford. Moscow beckons, with its 16-hour working days. That suits him, he says.
The life of Stephen Jennings: Vital statistics
Born: August 3, 1960
Marital status: divorced, now living with girlfriend. He has four children
School: Spotswood College, New Zealand
Universities: Massey and Auckland
First job: economist at New Zealand’s Treasury
Salary: undisclosed. His wealth was estimated at £2.5 billion before the 2008 crash
Homes: Moscow, Burford, and Oakura in New Zealand
Car: black Audi A7
Book: The Feast of the Goat, by Mario Vargas Llosa
Film: The Deer Hunter
Music: Tim Finn
Gadget: Albion Legend saddle
Working day
The boss of the Renaissance group wakes at his house outside Moscow at 6.30am. Stephen Jennings is then driven into the city with a bodyguard. “I’ll try to go to the gym first thing and start work after 8am.” He focuses on structure and strategy. “You have to get the architecture of the business right; the right people in the right places.” Then he looks at the numbers. “And you look at them in different ways, depending on the life cycle of the business.”
Jennings has seven executives who report direct to him but speaks to dozens more. He entertains clients with lunch in his office, and often dines out with contacts. He usually doesn’t get home until midnight.
Downtime
“I am not a big spender. I did have a private jet before the crash — it was my flying bed. Then I set the record for going from a Gulfstream to Aeroflot economy,” says Jennings.
He visits Britain every fortnight to see his children, who live with his former wife in Oxford. “I bought a place nearby [at Burford]. A lot of my recharge time is there. I love riding, walking and fishing.”
Jennings is a passionate supporter of the New Zealand All Blacks, frequently flying round the world to watch their matches. He has also raised $250,000 for the New Zealand earthquake appeal.