Renaissance Capital, an investment bank specialising in emerging markets and the natural resources sector, has appointed former Morgan Stanley and Merrill Lynch banker Sheldon Trainor as chairman of its Asia business.
The appointment is part of a business cooperation agreement between Renaissance and Trainor’s boutique advisory and principal investment firm, PacBridge Capital Partners, which aims to leverage the experiences and skills of both parties to exploit corporate advisory and principal investing opportunities in the region. Trainor will play a major role in shaping Renaissance’s strategy in Asia, with a special focus on the wider natural resources sector, including energy, metals, mining and agriculture, Renaissance said.
Since it opened its office in Hong Kong in June last year, Renaissance has grown into a sector-focused business with 26 people on the ground in the region that cover sales, sales trading, research and investment banking. It has also added an office in Beijing.
One key focus is to develop an equity capital markets business by bringing foreign listings into Hong Kong. Another – which is primarily run out of the Beijing office – is to look at M&A opportunities and join the dots between China and the geographies where Renaissance is already active, such as Russia, CIS (the Commonwealth of Independent States) and Africa. On top of that, the bank is also leveraging its expertise in energy and resources to focus on ECM opportunities in Australia and Mongolia.
The teaming up with PacBridge and Trainor will help fill a gap in a couple of areas where Renaissance has a lot of interest, but hasn’t yet made much progress, Renaissance Capital’s Hong Kong CEO, Jeremy Sparrow, said in a phone interview yesterday. One of those is Indonesia, where Trainor “has spent a lot of time and had a lot of success".
“We think Indonesia is a huge opportunity for us, but clearly it is a highly competitive and very relationship-driven market that was always going to take a while to develop. I think this agreement will be a huge catalyst to our business in that part of the world,” said Sparrow, who has been with Renaissance for 11 years and has a background as head of equities and head of international sales.
The other area is principal investments. “We have made a conscious decision, through our proprietary vehicle Renaissance Partners, to put proprietary money into this part of the world. And that is something that Sheldon has demonstrated that he can do incredibly successfully,” Sparrow said.
Indeed, Trainor, who also has a background in natural resources, spent a lot of time on this while he was head of investment banking at Merrill, where he developed a business model of investing the bank’s own money alongside that of its private equity and hedge fund clients. And it is something that he continues to focus on at PacBridge. Initially set up to focus on distressed assets in the energy and resources sector, PacBridge converted itself into a classic boutique adviser after the markets started to rally again, but also kept up its principal investments. In the past 12-18 months the firm has built what Trainor refers to as a “fairly significant” private equity business in Indonesia, covering the soft commodities, metals and mining sectors.
“I think the footprint and skill set that [Renaissance] has dovetails very nicely with what we have built in Indonesia and together we will focus on expanding in Mongolia where they already have a pretty good footprint,” Trainor said. “Renaissance Partners’ capital and proven track record of investing in the resources sector is going to be a very significant benefit for us in doing deals with other clients and partners in the region,” he added.
Renaissance Partners currently has approximately $1 billion invested in various resources assets around the world. According to Sparrow, the firm is the second largest forestry owner in Russia and one of the largest owners of farm land in the Ukraine. In Africa, it is one of the largest developers and land owners and also owns other resources, such as coal mines.
Trainor also argued that the talk of Hong Kong becoming a listing hub for resource and energy companies from Asia and other emerging markets brings opportunities for Renaissance, especially in the mid-cap space. From the point of view of the big investment banks, many of these deals are either too small or too complicated, or the banks don’t have the geographic connectivity to make them work, he said.
“I think this is where Renaissance is going to differentiate itself and become a leader in that market segment,” he said.
Renaissance made its first move in Asia when it acted as a joint bookrunner on Russian aluminium producer Rusal’s $2.24 billion Hong Kong IPO in January last year and currently has four ECM mandates in the region, which, according to Sparrow, may become public over the next couple of weeks.
On the M&A side, the firm is currently working on five opportunities involving companies from China on the one side, and Africa, Russia and Kazakhstan on the other. The bank is also in the process of hiring a few more people, which will bring its total headcount in the region to about 35 by the third quarter.
Canada-born Trainor joined Merrill Lynch in 2005 after 11 years with Morgan Stanley, where he spent his last four years as head of the highly successful general industries group in the region. His initial role with Merrill was as head of investment banking for Asia, but in September 2008 he gave up his day-to-day responsibilities to focus on building the principal investment business as vice-chairman of investment banking for Asia ex-Japan. He left Merrill in January 2009 to set up PacBridge, but stayed on as a paid adviser for a few more months.
Prior to joining Morgan Stanley he worked with Credit Suisse First Boston in Australia.
