LeapFrog launches $350m fund with Prudential

The firm, which is poised to begin raising its own fund, will manage the separate account that will invest up to $200m in insurance companies in Africa.

LeapFrog Investments will manage a $350 million separate account for Prudential Financial Incorporated (PFI) targeting investments in life insurance companies in Ghana, Kenya and Nigeria.

LeapFrog partner Stephen Bowey told Private Equity International that the fund will seek investments with a deal size of up to $200 million.

“We tend to look at smaller, growth-cap businesses, but this fund is more about looking for established, larger-sized companies and making larger-sized deals,” Bowey said. “So, fundamentally there is no conflict between our existing funds, which usually make deals between $10 and $50 million.”

LeapFrog invests in financial services businesses in South Africa, Kenya, Ghana, Nigeria, India, Sri Lanka, Indonesia and the Philippines.

It is poised to begin fundraising for its third vehicle that is expected to target $800 million, as reported by PEI. In December, the firm received a cornerstone commitment of $200 million to the fund from the Overseas Private Investment Corporation, the largest commitment to any impact fund.

LeapFrog’s second fund closed on its hard-cap of $400 million in September 2014, 12 months after its first close on $204 million.

LeapFrog co-founder and partner Jim Roth told PEI that Prudential was looking for a fund manager with lots of expertise on the ground in the insurance market in Africa. “It’s a pretty straightforward reason [for selecting us], considering our expertise in the region,” Roth said.

LeapFrog’s portfolio companies include mobile insurer BIMA and Africa-based financial payments company afb.

Bowey said that the insurance market in Africa is “enormously underpenetrated” with 5 to 10 percent annual growth or more.

PFI executive vice president and chief operating officer Charles Lowrey said in a statement that the investment expanded PFI’s footprint into Africa, “a continent that we believe offers tremendous potential for growth over the long term.”

PFI is an investor in LeapFrog’s most recent private equity fund, it said in a joint statement, and also a member of the LeapFrog Insurance Innovation Circle, a knowledge sharing initiative.

The firm manages over $1 trillion in assets as of 30 September and operates in the US, Asia, Europe and Latin America.