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February 27 2018

LeapFrog successfully builds and exits Ghana’s top pensions provider

  • LeapFrog Investments has sold its full stake in Petra Trust to Capital Alliance Private Equity IV Limited, a fund managed by African Capital Alliance, a pan-African investment firm
  • LeapFrog’s investment over the past three years enabled Petra to scale swiftly to become Ghana’s largest independent pensions trustee with GHS 1.4bn [USD 310m] in AUM
  • Petra has reported 76 per cent average annual revenue growth since 2014, and now reaches 2.4 million Ghanaians
  • The partnership tapped into vast demand for financial inclusion in Ghana, with only 19 per cent of the population having ever used a formal savings product at the time of investment in 2014

London 27 February 2018:

LeapFrog Investments, the dedicated equity investor in financial services and healthcare for emerging consumers, has successfully exited its holding in Petra Trust, the largest independent pensions trustee in Ghana, to Capital Alliance Private Equity IV Limited, a fund managed by African Capital Alliance (ACA), a pan-African investment firm. Petra has played a critical role in creating the Ghanaian pension market, bringing the benefits and protections afforded by pensions to 2.4M Ghanaians.

LeapFrog’s investment in 2014 was predicated on the shifting financial services landscape of Ghana, which saw the introduction of a pensions industry that did not exist prior to the government reforms of 2008 to 2010. At the time of investment, only 19 percent of the population had ever used a formal savings product.

The LeapFrog and Petra team rapidly grew the business into the leading independent pensions trustee in Ghana with over 1.4bn GHS (USD 310m) in assets under management (AUM). The company has achieved average annual revenue growth of 76 percent across the period of investment.

Kofi Fynn, Managing Director, said, “In partnership with LeapFrog, we have made key changes to the business, including introducing a world-class governance structure, diversifying our product offering, and opening up access to high quality, affordable savings for Ghanaians. Our work together has set the foundations for the provision of financial security for millions of emerging consumers in Ghana.”

LeapFrog played a key role in the evolution of Petra’s product expansion strategy, helping the team to establish a consumer distribution business distinct from its corporate trustee function. A market study by LeapFrog Labs, the firm’s R&D hub, identified a significant opportunity to serve consumers in the informal sector, comprising self-employed people in small unregistered enterprises, largely in unregulated and unprotected jobs.

Labs identified that this consumer group demonstrated a high demand for long-term savings products. In response, Petra developed one of its flagship products, the “Savings Booster” to address this market need. Today product sales contribute over GHS 30m [USD 6.7m] in assets under management, serving 5,000 customers.

The World Bank estimated that the Ghanaian economy expanded by 9.3 per cent in the third quarter of 2017, making it one of the fastest growing economies in the world, and in turn fuelled a rapid rise in household income, which now stands over 40 per cent higher than in 2010.

Patrick Duff, Director at LeapFrog Investments, commented, “Pensions can be the catalyst for the economic transformation of the lives of Ghanaians. Our investment was based on a firm belief in the growth potential of the Ghanaian pensions industry and the pioneering approach of the Petra’s management team. We are honoured to have worked with Kofi and his exceptional team and been part of bringing vital, accessible savings products to millions of Ghanaians.”

Kofi Kwakwa, Executive Partner of African Capital Alliance, commented: “LeapFrog and Petra have built a market leader that is strongly positioned to harness the rise of Ghana’s pension industry. Our investment will capitalise on this opportunity, providing Petra with a platform to scale across West Africa and deliver savings products that secure the prosperity of millions of emerging consumers.”

Petra constitutes LeapFrog’s seventh successful exit for investors since November 2016, including the landmark sale of its stake in BIMA, the pioneering digital insurance platform, to Allianz Group’s digital investment arm, the full realisation of a stake in Mahindra Insurance, the sale of Shriram CCL to its promoters, and partial exits from IFMR Capital to global financial institutions Fidelity and Standard Chartered, and a partial sale on Magma Fincorp shares on the public market. These pioneers in digital financial inclusion are driving the creation of a thriving financial sector in emerging markets.

“In partnership with LeapFrog, we have made key changes to the business, including introducing a world-class governance structure, diversifying our product offering, and opening up access to high quality, affordable savings for Ghanaians. Our work together has set the foundations for the provision of financial security for millions of emerging consumers in Ghana.”

Kofi Fynn Managing Director, Petra Trust