LeapFrog backs East Africa insurer

This is the social impact investor’s second deal from its latest fund

Profit-with-purpose investor LeapFrog Investments has agreed to invest KSh 1.68 billion (€14.9 million; $18.7 million) for a majority stake in East African general insurer Resolution Insurance, according to a joint statement.

The investment will be made through Resolution Insurance’s holding company, Resolution Health East Africa, which has operations in Kenya and Tanzania and a partnership with IAA-Resolution in Uganda.

The deal marks LeapFrog’s second investment from its second fund, which closed on its target and hard-cap of $400 million in September, 12 months after holding a first close on $204 million. In March the firm invested $29 million for an undisclosed stake in India’s IFMR Capital, a financial services business operating across 24 Indian states.

The fund is looking to make equity investments of between $10 million and $50 million in South Africa, Kenya, Ghana, Nigeria, India, Sri Lanka, Indonesia and the Philippines. Investors in the fund include a number of the world’s largest insurers and re-insurers, including Swiss Re, PartnerRe, AIG, MetLife, Prudential Financial and AXA, PEI reported earlier.

LeapFrog said it has earmarked up to $100 million from the fund for investment in East Africa. 

The insurance market in East Africa is estimated to be a $2 billion industry, and the Kenyan non-life insurance market is growing at 20 percent per year, according to Resolution and LeapFrog. This is largely driven by the health insurance sector, which is expanding at 38 percent per year.

“East Africa is home to a 150 million strong population with insurance penetration rates below 4 percent, creating a vast opportunity to deliver financial inclusion at scale,” LeapFrog partner Dominic Liber said.

The investment in Resolution is LeapFrog’s second in Kenya. In October the firm sold its minority stake in East African insurer Apollo Investments to Swiss Re for an undisclosed amount in its second exit from its first fund, a $135 million vehicle raised in 2009. Earlier in the year the firm sold its stake in Ghanaian insurer Express Life to UK-listed Prudential in a deal that generated an internal rate of return of 82 percent.