LeapFrog said the investment (2-page / 96 KB PDF) will be made through Resolution Insurance’s (Resolution) holding company, Resolution Health East Africa, which has operations in Kenya and Tanzania and a partnership with IAA-Resolution in Uganda.
LeapFrog partner Dominic Liber said: “East Africa is home to a 150 million strong population with insurance penetration rates below 4%, creating a vast opportunity to deliver financial inclusion at scale.”
LeapFrog said the deal marks its second investment from its second fund, “which closed on its target and hardcap of $400 million in September, 12 months after holding a first close on $204m”.
Last March, LeapFrog invested $29m for an undisclosed stake in India’s IFMR Capital, a financial services business operating in 24 Indian states.
In addition, LeapFrog said the fund “is looking to make equity investments of between $10m and $50m 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, the company said.
LeapFrog said it has earmarked up to $100m 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% per year,” according to Resolution and LeapFrog. “This is largely driven by the health insurance sector, which is expanding at 38% per year.”
Last October, LeapFrog 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 $135m facility raised in 2009. Earlier this year, LeapFrog sold its stake in Ghanaian insurer Express Life to UK-listed Prudential in a deal that the company said “generated an internal rate of return of 82%”.