Jennings oversees his investment bank from his office overlooking the Moscow River Anna Skladmann
Stephen Jennings, the co-founder and chief executive officer of the Russian investment bank Renaissance Capital, is far from his adopted home in Moscow. Sitting on a throne-like dais, the black, red, and green Kenyan flag draped behind him, Jennings presides over the launch of Tatu City, a planned community for 60,000 northeast of Nairobi. Renaissance has already spent $100 million of its own cash on land and planning. "We've never been involved in a project that has excited and inspired me more," Jennings tells an audience of Kenyan officials and business leaders in his broad New Zealand twang.
Constructing a city from scratch in such a dicey market might seem like a reach for a bank that has barely survived two near-death experiences in only 12 years. Kenya ranks among the world's worst countries in an annual corruption index compiled by the advocacy group Transparency International—154th out of 178. For Jennings, this kind of gamble is business as usual: part of a risky and expensive push into brokerage, investment banking, and real estate across sub-Saharan Africa. That strategy fits into his larger ambition of making Renaissance a financial powerhouse in emerging markets worldwide.
Vimal Shah, a Kenyan co-investor in Tatu City, calls Jennings "a believer." The owner of an oilseed refining business, Shah recalls a 2007 helicopter ride over the Tatu site, now a coffee plantation. Looking south at the sprawling slums of Nairobi and the traffic-choked roads surrounding the capital, the Renaissance CEO "understood instantly" the potential appeal to the Kenyan business class of a gleaming suburb with its own complex of modern residences and office buildings, says Shah. "He said, 'Done. Let's do it.' "
Tempering his boldness, Jennings, 50, has demonstrated a canny pragmatism when protecting his interests back in Russia. He understands and observes Moscow's murky and sometimes rough local rules. After Vladimir Putin, a former KGB officer, was elected President in 2000, Jennings hired several executives with connections to the Kremlin and the Russian intelligence service, now known as the FSB. Renaissance has generally avoided run-ins with the government, even if that requires sacrificing an investment opportunity. In Africa, Jennings once again will have to balance his appetite for risk against the hazards of doing business in a volatile environment.
The Taranaki peninsula, where Jennings grew up on a farm, is "the boonies, even by New Zealand standards," he says. An avid rugby player, he excelled at school and landed a spot in a prestigious economics program at the University of Auckland. From there he went to work for New Zealand's Treasury Dept. during a period of tax cuts and privatization. A subsequent job with Credit Suisse First Boston took him to Moscow for what was supposed to be a six-week consulting assignment.
Boris Yeltsin's government had hired Western investment banks to help privatize the post-Soviet economy. Jennings, who didn't know any Russian, was paired with fellow Credit Suisse banker Boris Jordan, the American grandson of Soviet émigrés and a fluent speaker. They set up shop in the art nouveau Metropol Hotel, across from the Bolshoi Theater, and hired 300 students from Moscow State University as temporary staff. Jennings, then 32, and Jordan, 27, soon spotted a lucrative opportunity.
The Yeltsin government had issued vouchers that citizens could use to acquire shares in state-run businesses. Many Russians wanted quick cash instead. Lacking rubber bands, they bundled the vouchers with cut-up condoms and brought them to Credit Suisse, which bought and resold the certificates at a fat profit. Jennings and Jordan then decided they could make more money buying undervalued Russian assets themselves. In early 1995, they quit Credit Suisse and started Renaissance Capital.
They were an incongruous pair. Baby-faced, gregarious Jordan hobnobbed with politicians and journalists. Lanky, no-nonsense Jennings quietly ran the business. By 1998, Renaissance was raking in $150 million in annual profits. In June of that year, the co-founders held a client conference that featured a party at the pastel-pink-and-white Kuskovo Palace near Moscow. Hundreds of guests strolled through gilded drawing rooms, sipping premium champagne and grazing on caviar and lobster. Bolshoi dancers pirouetted on a stage while a team of jet-skiers zoomed though flaming hoops on an adjacent lake. "Boris and Stephen, God bless them—it was over the top," recalls Robert P. Smith, a Boston-based investor who attended the gala.
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