A billion transformational dollars

Andrew Kuper, Founder and CEO of LeapFrog Investments, shares four uplifting pieces of news, each of which will transform markets and communities.

Doug Lacey speaks to CNBC

LeapFrog’s Doug Lacey speaks about LeapFrog’s partnership with leading East African insurer, Resolution Insurance.

LeapFrog, FMO and Partner Re invest in Indonesia’s Reliance

  • LeapFrog Investments, FMO (the Dutch development bank) and PartnerRe, today announce that they have jointly invested Rp 562 billion (USD 45m) in leading home-grown Indonesian financial services company, Reliance Capital Management (“Reliance”)
  • Reliance is a rapidly growing financial services group, and recently announced an investment in BKE Bank, a general bank with a focus on improving access to financial services
  • The investment will be accompanied by extensive injections of expertise, aimed at further accelerating Reliance’s growth
  • The investment will help to boost Reliance’s reach into Indonesia’s rapidly growing emerging middle-class, who have limited access to essential financial tools

Jakarta, Indonesia – 28 April 2015

LeapFrog Investments, FMO (the Dutch development bank) and PartnerRe, today announce that they have jointly invested Rp 562 billion (USD 45m) in leading home-grown Indonesian financial services company, Reliance Capital Management.

Reliance is a diversified financial services company that includes Indonesia’s fourth largest group health insurer, a listed top-5 retail securities arm, fast growing life insurer, operations in general insurance, and multifinance and asset management companies. The company has 750,000 individual end-customers, and a wide range of local and global institutional clients. It recently announced an investment in BKE Bank, a general bank with a focus on improving access to financial services. LeapFrog Investments is the world’s largest private equity investor in emerging markets financial services; this announcement follows a recent investment in SMK, a fast growing Thai insurance company. FMO is the Dutch development bank, managing some EUR 8 billion in assets. PartnerRe is a leading global reinsurer, based in Bermuda. The transaction has been structured to provide investors with a significant minority stake in the business.

Reliance President Director and Founder Anton Budidjaja, said, “This investment is a vote of confidence in Reliance’s strategy, and also in the direction and potential of the Indonesian financial services industry. We believe that LeapFrog, FMO and PartnerRe will bring exceptional insight and skills to building our business. We are excited to be working with them to extend the industry’s reach to Indonesians who have not yet had the benefit of essential financial tools.”

LeapFrog Partner and SE Asian head, Michael Fernandes, commented, “We are exceptionally positive about the quality of the team at Reliance, and its ability to address the enormous opportunities in the Indonesian market. This investment, our first in Indonesia, will allow us to participate in one of the world’s most exciting economies, and in a country which is becoming increasingly attractive for investors. As it grows, so consumers will have greater need for financial services: Reliance is poised to meet that need.”

FMO’s CIO Linda Broekhuizen said: “This facility will assist Reliance in expanding its role in the financing of Indonesia’s rapidly growing emerging middle-class, contributing to job creation in Indonesia.”

Chai Phrompechrut, Head of Private Equity at PartnerRe, said, “Anton and his team have built an exceptional platform and we are delighted to partner with LeapFrog and FMO to further solidify Reliance’s position as a leading diversified financial services conglomerate in Indonesia.“

Indonesia’s emerging middle class is expected to grow to 140m in the next 10 years. Insurance penetration is low, at around 2.1% of GDP (compared to greater than 4% in neighboring Singapore, Malaysia, and Thailand). The life insurance sector in Indonesia is projected to grow at over 20% pa over the next 5 years, while general insurance is projected to grow at 15% pa over the same period. Health insurance is projected to grow at 12% pa through the next 5 years.

Indonesia has one of the fastest expanding and healthiest banking sectors in Southeast Asia. However, financial access is low compared to other Asia-Pacific countries, with just 36% of adults having an account with a financial institution in 2014, versus 78% and 81% in Thailand and Malaysia, respectively.

Said Budidjaja, “Reliance is well positioned to serve the emerging Indonesian consumer across their financial services needs, as the demand for essential financial tools and products continues to expand rapidly.”

LeapFrog, KKR and Indium invest in Magma

Kolkata, India – March 30, 2015

Magma Fincorp Ltd. (“Magma”) today announced that its Board of Directors have approved preferential allotment of equity shares worth INR 5 billion (~US$80 million) to a clutch of investors including KKR; Indium V (“Indium V”), an investment vehicle advised by India Value Fund Advisors (“IVFA”); and LeapFrog Investments (“LeapFrog”). The transaction is subject to customary regulatory approvals.

Indium and LeapFrog, both new investors in the company, will invest INR 2.2 billion and INR 2.0 billion, respectively. KKR, which first invested in Magma in 2011, will inject an additional INR 0.8 billion.

Magma will use the new capital to grow its business and capture opportunities created by India’s economic growth and improving financial markets.

“For this round of investment, we have carefully selected partners who are firm believers in India’s growth story and believe in Magma’s business model, people wealth, asset quality and outstanding customer relationships in the rural and semi-rural India. They are providers of long-term strategic capital that can help Magma attain the next level of growth. This transaction is not just about capital but the foundation of a lasting partnership. While the Mauritius-based LeapFrog Investments is now one of the world’s largest impact investment funds, investing in financial services companies across Asia and Africa, Indium V is a premier private equity investment fund focused on India. This will be the second investment by KKR into Magma. All three organisations have rich history of working with the management and building world-class enterprises. All the investors share the long term vision of Magma to create a world class financial services organization. We look forward to their contribution across strategic and operational aspects of the organization. Our existing investors KKR, by retaining their stake in the company, have reaffirmed their belief in the growth prospects of the company”, said Mr Sanjay Chamria, Vice Chairman & MD of Magma.

“KKR has been a committed partner to Magma since our original investment. As the Indian economy continues to recover, it has reaffirmed our confidence in the longer-term Indian growth story. We continue to believe that rural and semi-urban financial inclusion will be a key element of this growth and Magma is a unique platform that can actively drive this financial inclusion. We hold the Magma management team in the highest regard and look forward to our continued involvement as they grow Magma to new heights”, commented Mr Sanjay Nayar, Member & CEO of KKR India.

“Magma has a stellar reputation of transparency in India. This is a long-term investment for Indium in a company which has successfully built a model of financial inclusion through providing equality of opportunity to the disenfranchised. Led by enterprising promoters who have built an impressive platform of sound risk management and credit underwriting capabilities, this investment is reaffirming faith in their winning model. Indium believes that this partnership will help propel the growth in rural and semi-urban segments by promoting consumer credit, agri lending and corporate lending to small-and-medium-scale enterprise”, said Mr Vishal Nevatia, Managing Partner of IVFA on behalf of Indium V.

“We chose Magma because we believe in the India growth story and believe that it presents the largest potential for financial returns and social impact. Millions of people in India would like to start a business, or plant a new crop, or send their children to school rather than to work. The Indian rural population wants to grow and that’s where Magma has been working for the past two and half decades. The proposed investments will provide Magma with strategic capital and will enable the Company to expand its footprint deeper into these untapped markets, thereby contributing to financial inclusion in India. We hope our investment will give wings to people’s dreams and fulfil the aspirations of millions”, said Mr Michael Fernandes, Partner at LeapFrog.

Ambit Corporate Finance was the exclusive financial advisor and Wadia Ghandy & Co was the legal advisor to Magma.

LeapFrog invests $25m in afb

  • LeapFrog Investments is investing US$25m in AFB Mauritius Limited (“afb”)
  • afb is a disruptive financial technology platform that offers life-changing financial tools to financially-excluded consumers and small businesses in sub-Saharan Africa
  • afb partners with mobile operators and retailers to reach this vast, untapped market
  • afb is growing rapidly, and already reaches some one million people in sub-Saharan Africa; this investment will accelerate the impact of the business across the region
  • This is LeapFrog’s fourth investment from a US$400m fund, which has up to $200m to allocate to pioneering financial services providers in Africa

Port Louis, Mauritius – 26 February 2015

LeapFrog Investments and AFB Mauritius Limited (“afb”) have today announced that LeapFrog has invested US$25m in afb.

afb is a fast-growing financial technology (“fintech”) platform that offers life-changing financial services to financially-excluded consumers and small businesses.

Partnering with major mobile operators and over 400 retailers including Woolworths and Naivas, afb has extended its reach to over a million people in sub-Saharan Africa. afb currently has operations in four countries, including Kenya, Zambia and Ghana with rapid expansion into adjacent geographies planned. afb also offers branded store cards for the English Premier League giants Manchester United and Chelsea.

Across sub-Saharan Africa, consumer finance from formal banking channels is almost non-existent: Insurance is massively underpenetrated, and can be as low as 1% of the adult population in many African markets. Savings products also remain chronically underdeveloped, and only 5% of adults source loans from formal institutions.

By contrast, retail and mobile telephony are exploding, and outstripping access to traditional banking channels. Sub-Saharan mobile penetration stands tall with 70% of people having access to a mobile phone. 130 million subscribers alone, reside in afb’s core markets. Tapping into this channel with innovative mobile products has allowed afb to reach 300,000 customers in two months.

afb CEO Karl Westvig said, “We believe everyone should have access to good financial choices. We’ve developed a highly scalable business model that should reshape the provision of quality financial products such as insurance, savings and credit. LeapFrog’s investment, specialist expertise and rich African networks will help us to turbocharge our expansion.”

Michael Joyce, who led the transaction at LeapFrog Investments, said, “afb is connecting the dots between Africa’s demand for financial services and the promise of new technologies, in a way that simply hasn’t been done before. Their team has a deep socially committed heritage, founded on the premise of serving the underserved with ethically designed financial services.”

The investment in afb reflects LeapFrog’s interest in innovative fintech businesses that reach the unreachable through unique distribution models. The investment follows an earlier investment in BIMA, the leading mobile insurance platform reaching over 10 million emerging consumers across Africa, Asia and Latin America.

Said Joyce, “We are excited about the opportunities for fintech to enable financial inclusion at tremendous scale; we’re watching this space closely.”

The afb partnership marks LeapFrog’s fourth investment from its US$400m fund, which has up to $200m to allocate to pioneering financial services providers in Africa. In addition to capital, LeapFrog provides its partners with deep expertise in areas such as product design and multi-country rollout. The group’s portfolio of investments currently reaches 24.5 million people in 18 countries.

LeapFrog and Lombard invest in SMK Insurance

  • LeapFrog Investments, Lombard Investments, and Syn Mun Kong Insurance Public Company Limited (“SMK”) [SMK:Bangkok] announced today that LeapFrog and Lombard will each acquire approximately 11% of SMK, from Royal & Sun Alliance Insurance Plc (“RSA”)
  • SMK is Thailand’s second largest automobile insurer and fifth largest general insurer. Founded in 1951, SMK is well-placed to capture growth in Thailand, where insurance penetration is low but market demand accelerating

Bangkok, Thailand – 19 December 2014

LeapFrog Investments, Lombard Investments and Syn Mun Kong Insurance Public Company Limited (“SMK”) [SMK:Bangkok] announced today that LeapFrog and Lombard will each acquire approximately 11% of SMK from Royal & Sun Alliance Insurance Plc (“RSA”) of the United Kingdom.

SMK is a fast growing general insurer, operating Thailand’s second largest automotive insurance business with specialized health, personal accident, fire, marine and transportation insurance offerings as well. Thailand, home to 67 million people, represents an underpenetrated automotive insurance market now growing at an average rate of 18% per year between 2009 and 2012.

SMK’s CEO Reungdej Dusdeesurapoj announced: “We are delighted to partner with LeapFrog and Lombard, who together bring considerable business operating expertise to our firm. We expect to draw on LeapFrog’s unique experience in general insurance business in emerging markets, and access Lombard’s deep local market expertise in Thailand.”

Lombard Investments Managing Director Pote Videt, said “SMK is an outstanding family business with a demonstrated track record of growth and profitability. We believe the combined skills of Lombard and LeapFrog can contribute SMK to achieving higher levels of performance”.

LeapFrog Investments Partner and Co-Head of Asia Stewart Langdon, said “So much of good business is about the people; SMK is staffed with a performance focused management team responsible for creating an exceptional business. The team is in an ideal strategic position to capture rapid growth from the emerging consumer segment while delivering financial inclusion at scale. We are delighted to invest alongside Lombard, a well-established firm with an exceptionally successful, long term history of investment in Thailand.”

LeapFrog to acquire majority stake in Resolution Insurance

  • LeapFrog Investments and Resolution Insurance today announce that LeapFrog intends to invest KSh 1.68 billion (US$18.7million) for a majority stake in Resolution Insurance, through its holding company, Resolution Health East Africa Limited
  • Resolution Health East Africa Limited is the holding company for leading East African general insurer Resolution Insurance with operations in Kenya and Tanzania and in partnership with IAA-Resolution in Uganda
  • Kenya’s non-life insurance market is growing at 20 percent per annum, with health insurance leading the charge at 38 percent. Resolution is strongly placed to capture much of this growth
  • LeapFrog’s expertise will give further drive to Resolution’s broader growth strategy, facilitating the delivery of diversified insurance to emerging consumers and businesses in East Africa

Nairobi, Kenya – November 20 2014

LeapFrog Investments and Resolution Insurance, have today announced that LeapFrog intends to invest KSh 1.68b ($US18.7m) for a majority stake in Resolution Insurance, through its holding company, Resolution Health East Africa Limited.

LeapFrog Investments is the world’s largest dedicated private equity investor in emerging markets financial services. Resolution Health East Africa Limited is the holding company for leading East African general insurer Resolution Insurance with operations in Kenya and Tanzania and in partnership with IAA-Resolution in Uganda.

LeapFrog partner Dominic Liber said: “Resolution is a strong and growing business, with an exceptional management team. In a short time, Resolution has grown to become Kenya’s fourth largest health insurer and positioned itself as a rising star in East Africa’s fast-expanding health insurance space. Our investment positions Resolution to take the next leap in its growth, and we look forward to working with them to expand their reach in health insurance and beyond.”

Resolution CEO, Peter Nduati, said “We are excited to partner with LeapFrog for our next stage of growth. We believe that LeapFrog’s dedicated operational investing approach, strong track record in health insurance, and emerging consumer expertise will add tremendous value. Importantly, LeapFrog shares our entrepreneurial ethos and commitment to financial inclusion.”

Insurance in East Africa is a high potential market, estimated to be a KSh 180 billion (US$2 billion) opportunity. In particular, the Kenyan non-life insurance market is growing rapidly at 20 percent per annum, fuelled by a robust health insurance sector expanding at 38 percent per year. There is a major opportunity to extend access to health and diversified insurance to millions of low-income emerging consumers across East Africa, leveraging Kenya’s strategic position as a regional leader and gateway in.

Said Liber, “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. Investing in businesses like Resolution enable us to continue contributing to the development of enduring institutions that serve the people of East Africa.”

The deal, which is undergoing final regulatory processes, marks LeapFrog’s second investment in Kenya; in October it announced the sale of its stake in Apollo Investments Limited, one of the top three regional insurers in East Africa, to Swiss Re.

The investment in Resolution reflects LeapFrog’s ongoing commitment to East Africa as an attractive investment destination. LeapFrog recently raised a new KSh 36 billion (US$400 million) fund for investing in financial services businesses in Africa and Asia. Up to KSh 9 billion (US$100million) of this fund is earmarked for investment in East Africa.

LeapFrog also has investments in insurance underwriters and distributors in countries such as Ghana, Nigeria, South Africa and India. The group’s portfolio of companies currently reaches over 22 million people across 16 countries.