How did you get off the ground?
Temi Popoola Founded in 1995, Renaissance Capital is a leading emerging and frontier markets investment bank with operations in sub-Saharan Africa, Russia, the Middle East, and Asia. The firm also offers its clients access to these markets through financial centers such as London and New York. Renaissance Capital is a strong voice for emerging and frontier markets and has been advancing its belief in the potential of the world's rapid-growth regions for over 21 years. One such region is Nigeria, where we have a 25-man team based in Lagos, offering clients solutions in each of our core businesses—M&A, equity and debt capital markets, securities sales and trading, research, and derivatives. We have been present in Nigeria for a little over 10 years now.
Wale Adeosun An investment capital firm founded by African investment professionals with offices in New York, Lagos, and Nairobi, the idea behind Kuramo Capital was to help global institutional investors capture the tremendous growth opportunities in sub-Saharan Africa. We started in 2011 and have raised about USD300 million and invested at least USD250 million in companies within sectors ranging from fast-moving consumer goods and power to agribusiness, technology, and financial services. We focus on alternative assets in growth markets, mostly private equity. In emerging markets like sub-Saharan Africa, the bulk of the opportunities are in the private sector, as many large and medium-sized companies are not listed on the stock exchange. For example, around 70% of the market capitalization in the Nigerian Stock Exchange is concentrated in three sectors: banks, brewers, and builders. We call them the Three Bs. As a result, one cannot buy shares in the telecoms industry in Nigeria right now, for example.
Where do you see the most demand?
TP We offer a broad range of services to a diverse clientele base, and our investors and clients, many of whom are international, find the biggest value proposition in our research coverage. We provide high-quality analysis on companies and the macro situation in Nigeria and sub-Saharan Africa, complemented by Renaissance Capital's on-the-ground presence, which helps add proper context to the research offering. For our local clients, our advice and distribution capabilities remain the most prized assets. As far as the Nigerian market goes, the major differentiating factor here versus other markets we cover is the fact that the markets here tend to be tied to commodity boom and burst cycles. Nigeria, for example, is only just coming out of a recession that was induced by the crude oil price crash of 2015, which has taken a massive toll on the capital market. The second factor is that the market lacks comparative depth and sophistication. There are, however, more similarities than differences. The markets here are extremely well regulated; companies must ensure compliance with certain listing requirements; and investors must play by the rules.
WA We see most demand in equities, alternatives, and fixed income. 2018 may witness significant interest in real estate as investors cycle out of fixed income as yields come down and invest in commercial real estate with highly profitable and localized formats. In terms of sectors, we do not play as much in oil and gas as we do in others, such as consumer goods. We have a certain exposure to financial services; we also like ICT and have extensively supported small venture funds and companies. I have a passion for technology and in my prior life made a great deal of investments in Silicon Valley, where I made a great deal of money. Nigeria can be the Silicon Valley of Africa, and there can be many Nigerians who will be wealthier than Aliko Dangote by stirring things up. There are some young people in Nigeria coming up with innovative software solutions that are extremely promising. One of the beauties of being here is that the threshold of success is much lower than in developed markets. This is the case across a number of sectors because of the number of people and the wealth. In Nigeria, one does not have to sell to many people; if they can get 1% of the population, they get 2 million people. At USD1 per customer even, we are talking about huge returns.