RenCap to beef up BJM Securities in South Africa

Renaissance Capital continues its expansion drive: after opening its first South Africa office in February, the Russian emerging markets investment bank has now acquired Barnard Jacobs Mellet Securities, a leading brokerage in Johannesburg, for R207m ($28.2m).

It is the first of several deals planned by Clifford Sacks, new RenCap Ceo in South Africa and former co-Ceo for SA and Sub-Saharan Africa at BoA Merrill Lynch. Last month he also persuaded Tony Marcia to join RenCap as Head of African Trading after twenty years at Merrill Lynch. "You can't put yourself out as a serious pan-African equities player without being in SA," says Sacks.

RenCap chose BJM because of its reputation for outstanding research, says Sacks: "BJM Securities' high calibre team, market-leading research franchise and client-centric approach make it a perfect business and cultural fit for Renaissance Capital. When completed, the acquisition will mark a major step in building the first truly pan-African investment bank stretching from the Cape to Cairo."

The bank has offices in six African countries and plans to add more branches before the end of the year. It believes the market will pick up this year and following the BJM deal is expecting to double its African revenue. "There's a couple of things we have in our pipeline on the equities side that are $1bn plus," says Andrew Cornthwaite, RenCap deputy Ceo. "We are only scratching the surface of what is possible in Africa."

RenCap now plans to add staff - at least 25 people in the next six months - to its SA business to grow its capital markets knowledge and develop capacity to advise on IPOs. "We are very well set in terms of sales, trading and research, but we'll be hiring in capital markets, specifically equity capital markets," says Quinn Martin of RenCap. "We'll be adding people and it will be a mix of local hires and moving people from other places. Things are looking good."

According to Peter Mommsen, director of Unique Personnel in Johannesburg, "there is enough local talent to fill at least 80% of RenCap's staff complement. There are many candidates in this sector that have been moving back to South Africa who have the skills they are looking for. This deal confirms the level of confidence in our markets. The next 50 years of opportunity lie in developing nations such as ours."

The new business will be called Renaissance BJM to keep the brand value.

Taking over a well-known brokerage instead of building a business from scratch gives RenCap a head start of several years. But the deal is also seen as a coup for Andile Mazwai, BJM's chief executive and one of the South African financial sector's brightest stars. He secured what analysts described as a very good price for the unit and now has R300m cash in the business, which will focus on private clients and corporate finance.