The Interview: Stephen Jennings Kenyan reinvention

Stephen Jennings is one of New Zealand’s most successful exports, and actively chases risk. An economist by training, he made a vast fortune in Russia, before fleeing the country in 2012. Now based in Africa and building cities from the ground up, he talks to Matt Nippert about bruising business battles, housing and rugby.

Stephen Jennings – who’s made, lost, and remade a billion-dollar fortune at least twice – has called Russia, England and now Kenya home over the past two decades. But he still has a soft spot for Taranaki.

“I would point out that we’re the only undefeated team in New Zealand this year,” he says – from Nairobi – of the Taranaki Bulls team who in 2021 cleaned up the NPC.

Jennings, 61, has clearly mastered timezones and digital sports rights by keeping one eye on the team of the province where he was born: “They were decimated by injury: Eight forwards were out – including four locks, three to the All Blacks. That was a great achievement.”

A decade ago Jennings’ name regularly came up as the mystery big-money backer Taranaki Rugby was lining up to leverage itself into a Super franchise. That play never happened – in monetary terms it’d be a long way down the list of deals Jennings has engineered – but he doesn’t deny he keeps his hand in.

“I still have a small involvement, nothing like I used to, but I’m starting to get involved again,” he says of Taranaki rugby.

His access to provincial changing sheds and boardrooms is the least of Jennings’ inside line to moments where history has been made.

He’s had a ringside seat for three dramatic changes of the economic guard: First working in Wellingtonas a junior economist at Treasury in 1984 when Roger Douglas reshaped the New Zealand state; then Russia in the early 1990s ushering along the first fitful steps the country took out of Soviet central planning; and now in Kenya attempting to surf the wave of urbanisation reshaping the African continent.

He studied economics at Massey and Auckland universities before landing in Wellington in February 1984 at what he describes as a “very junior” job at Treasury. He caveats his modesty with: “at the same time, you know, it was a small department and there were so many things being overhauled”.

“You’ve got to remember the state that the New Zealand economy was in: Full wage and interest freeze; incredibly high rates of industry protection and Fortress Zealand; a 66 per cent top tax rate; incredibly subsidised agricultural sector; really bloated and incredibly inefficient state-owned enterprises, particularly in areas like telecoms and electricity, but also forestry. Massive subsidies for different industries,” he says.

He’s well-aware of criticism from progressive politicians and historians about the reforms of this era, but notes they’ve been left largely untouched in the decades – and many changes of government – since.

“Although those reforms are much maligned, they’re kind of maligned in an intellectually dishonest way, in the sense that, if they’re so bad, why hasn’t that framework been changed?”

After Wellington, Jennings embarked on his OE to London working for investment bank CS First Boston. A posting after London was supposed to be Hungary, but a short-term detour to Moscow in early 1992 – months earlier the Soviet flag had flown from the Kremlin for the last time as Mikhail Gorbachev resigned and dissolved the USSR – saw these plans derailed and the flat he’d rented in Budapest never stayed in.

He was initially tasked with helping the Russian state privatise a swathe of public assets – practically the entirety of their economy – but after low initial prices saw arbitrage opportunities for buyers. He switched sides and helped investors secure an economic position in post-Soviet Russia.

By 1995 he’d gone out on his own and founded Renaissance Capital, occupying an almost unique position for more than a decade as a bridge between East and West.

“We mediated about US$200 billion into different projects, capital markets, mergers and acquisitions. We ultimately become a specialist in that area and those markets,” he says of this time.

A currency crisis in 1998 almost spelled an early end for Renaissance, but Jennings used the low ebb as an opportunity to buy out his partners and take full control. Over the next decade he’d ride the rebound and acquire a bewildering spread of assets – forests in Ukraine, banks in Africa – that for a time saw him displace even Graeme Hart at the top of the New Zealand rich list with a net worth of more than $6b.

It didn’t last. Jennings had begun broadening Renaissance into a global outfit and by the mid 2000s had offices in 25 countries, focused largely on Africa. The continent had the heady and attractive risks of developing economies he’d become enamoured with in the early 1990s. He says this was a conscious strategy.

“At the same time, I could see the writing on the wall: Although not as clearly as I’d have wished. But, in broad-brush terms, I could see that the reforms were finished in Russia, that Russia was turning in on itself. And then there was this huge consolidation of power and assets happening,” he says.

The global financial crisis didn’t help, forcing recapitalisation from Putin-aligned oligarch Mikhail Prokhorov, but Jennings says it was a shift in wider geopolitical weather patterns that proved more decisive in forcing him out of that continent.

Tensions between Russia and the West started to haemorrhage as skirmishes in Georgia and Ukraine first killed off the confidence needed for an investment banking sector, and then started physically encroaching on his business.

“Our agricultural business in Ukraine was literally in a war zone. And then it just became a more hostile environment. And you can see what happened to a lot of entrepreneurs, both foreigners and Russians, who stayed. A lot of people have had problems after that,” he says.

The situation – his and others – deteriorated, and by 2012 Prokhorov’s half-share of Renaissance had been asserted as total control, and Jennings says he left the country he’d arrived in as a fresh-faced investment banker two decades earlier “once and for all”.

A 2019 English court judgment records at this time he was “forced to flee Russia”, but Jennings himself is now more philosophical about his time in the country.

“I have no hard feelings whatsoever. If you want to do risky things, you have to accept that things will go wrong. You can’t say you’ll take the good times and have a lot of ‘success’, and then be resentful when things don’t go well. So I don’t remotely look at it like that.”

He says his present destination, arriving in Russia with nothing and making a huge fortune and leaving with a smaller one and on to new adventures, wouldn’t have been reached without the journey.

“It was an incredible experience. It was a life-changing experience. I made some money, I learnt an enormous amount. And if I hadn’t done that I wouldn’t be able to do what I’m doing in Africa today, which I really love. So I just look at it in a very positive light, actually.”

His exit from Russia – leaving him in possession of a handful of assets in Africa he bundled into new firm Rendeavour – saw him drop off the Forbes billionaires list, but freed him up to fully focus on a continent that he sees as brimming with potential.

He has reinvented himself as one of Africa’s largest real estate developers, and while this industry seems to be a long way from investment banking, Jennings says the jump was more a change of job title than mindset.

“The little white lie is really I never was an investment banker until I went to Russia. I’m more of an investor, really, but sort of masqueraded as an investment banker for a while.”

The scale of Rendeavour’s planning puts even KiwiBuild’s unrealistic early ambitions to shame. His Tatu City on the fringes of Kenya’s capital Nairobi, one of seven greenfield mega-developments his company Rendeavour is championing in Africa, is expected to house 150,000 – twice the size of New Plymouth – when it’s finished.

“If you look at Africa: It’s growing; it’s urbanising; it’s modernising. But there’s just this massive deficit of high-quality urban infrastructure. And the big cities in the West all went through this, but they did it 150 or so years ago,” he says.

Not that it has all been smooth sailing. Some bruising lessons learned in Russia came in handy when powerful local officials in Kenya asked for a cut of Tatu City.

“Impunity works partly because people are intimidated and scared to speak out,” he says, recounting a clash with a local governor and former head of the Kenyan Reserve Bank.

“He said ‘Give me some pieces of land’ and I said ‘We’ll see you in court, we’re going to expose you.’ And we did, and he ended up losing his job. And then people realised that we’re prepared to fight back, and then they’d rather burgle someone else’s house.”

Aside from Taranaki rugby, Jennings has kept abreast with development in the country of his birth. He likes the look of new National leader Christopher Luxon – “the initial signs are encouraging” – and he serves on the board of pro-markets think-tank the New Zealand Initiative where his strong interests in housing and education are reflected in research outputs.

In 2016 he gave a public speech lambasting the then-Key government for inaction over home affordability and says a change in parties on the Treasury benches and five years has done nothing to address what he sees as a fundamental cause of economic and social problems.

“It has become much more acute in the last four or five years since I gave that speech,” he says. “And I’m not pointing the finger at Labour or National: I think they’re equally bad.

“This is disgraceful. Normal people definitely can’t afford a home, and a disproportionate amount of their income is going on rent. So it’s a massive source of poverty, isn’t it? So how can Kiwis look at themselves in the mirror and feel good about that? But education is even worse. And the trouble with education, the numbers have been out for a long, long time now. It’s not in anyone’s interest to have these huge social divisions.”

Along with flagging New Zealand’s high incarceration rate as a problem, Jennings does not sound like the caricature of an economist oligarch preaching the Invisible Hand.

“But you know what? I didn’t grow up in a wealthy household and my values don’t have anything to do with money.”

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