Renaissance Capital, an investment bank specialising in emerging markets and the natural resources sector, has let go of its Asia head, Jeremy Sparrow, as it strives to refocus its business in the face of tough market conditions.
The bank said in a statement that the “organisational changes” it is making in Asia are “in line with the adjustments that the firm is currently making to its business model globally on the back of the current market environment”. A spokesperson for the bank did not give any further details, but said that RenCap remains committed to Asia.
The bank opened in Hong Kong in 2010 after making a splash with its role on the $2.24 billion IPO of Russian aluminium producer Rusal in January 2010. The plan was to build an equity capital markets business by bringing foreign listings into Hong Kong, as well as looking for M&A opportunities between China and its core markets of Russia, the Commonwealth of Independent States and Africa.
Founded in Moscow in 1995, RenCap is well respected for its research and distribution capability, and has invested heavily in building its business in Asia, but Hong Kong’s lacklustre capital markets have produced few opportunities for growth capital investments or initial public offerings, particularly for emerging-market names in energy and commodities.
It is not for want of trying. RenCap hired Nick Andrews, formerly with J.P. Morgan and Credit Suisse First Boston in Hong Kong, as global head of equities in early 2010 and, in April last year, appointed former Morgan Stanley and Merrill Lynch banker Sheldon Trainor as chairman of its Asia business as well as entering into a business cooperation agreement with his boutique advisory and principal investment firm, PacBridge Capital Partners.
It also made some significant research hires in Hong Kong, appointed Ed Mason to a newly created position as head of its Asia equity product group and added an office in Beijing.
The logic was simple: Russia produces commodities; China consumes them. The opportunity to connect the two was compelling. “It is natural for these two regions to integrate further, including integration through the financial markets,” Sparrow told FinanceAsia back in 2010. “There are large pools of Asian capital, both sovereign and private, looking for commodity-driven ideas. Renaissance Capital has a dominant position in these resource rich geographies and we believe we are ideally positioned to intermediate these flows."
But the deals have not materialised. Like many other banks that made a push into Asia after the crisis, RenCap is now cutting its losses and re-focusing on its core markets. Mason is expected to take over the Asia chief executive role from Sparrow.
Before moving to Hong Kong, Sparrow was previously head of equities and head of international sales at RenCap’s London and New York offices, and had been a managing director at Renaissance since 2001. Earlier in his career, he had senior roles at Morgan Stanley and Paribas Capital Markets.