LeapFrog Investments has made its first exit from its debut fund, selling Ghanaian life insurer Express Life to UK-based insurance group Prudential.
LeapFrog focuses on 'profit with purpose' investing in Africa and other emerging markets, targeting “emerging consumers” under-served by traditional financial services. Its aim is to deliver both social and financial returns.
Express Life had about 60,000 customers when LeapFrog invested in the business in 2012. The firm said it had hoped to increase that to 500,000 by 2017 – but just 20 months after the initial investment, the company is already reaching some 730,000 customers, around 710,000 of whom are 'under-served people', according to LeapFrog. Express Life CEO Mokobi Aryee praised the “strategic support and operational know-how” LeapFrog provided during its period of ownership.
However, financial terms of this transaction were not disclosed, and LeapFrog declined to comment on its own return from the deal.
For Prudential, one of the world's biggest insurance companies, the deal represents its first direct foray into the African insurance market. LeapFrog founder Dr Andy Kuper told Private Equity International that he expected Prudential to continue this emerging consumer focus – something that was key to his firm's decision to sell. Indeed, this social aspect of the company's mission was critical to its commercial outperformance, he added. “We believe that it's a source of competitive advantage – and actually juices the return.”
LeapFrog is currently in the process of raising its second fund, which held a $204 million first close in September and is understood to be targeting $400 million. It plans to invest the money in financial services companies in eight countries across Africa and Asia.
“We believe that the emerging consumer represents a tremendous opportunity for financial services businesses, and insurance in particular,” Kuper said today. “Given the size of the under-served market, visionary financial services businesses that provide scalable solutions can be expected to provide top-tier investor returns.”