Pyramid Group

According to the World Health Organisation, Africa currently has the highest age-standardised mortality rate of non-communicable diseases (779 per 100K people, versus US and EUR at 400-600 per 100K people). Poor access to medical resources and over-burdened healthcare systems, as well as an increasing prevalence of noncommunicable diseases such as cancer and diabetes are driving a need for access to affordable new medicines and more advanced diagnostic equipment.

Pyramid Group is a leading distributor of specialist medical equipment and products delivering the latest standard of care, access and affordability to Africans to address this need.

Founded in 2001, the company has grown to be the largest specialty distributor for cardiac and orthopaedic equipment in East and West Africa offering a comprehensive range of quality medical products from top-tier brands including Medtronic Plc and Johnson & Johnson, opening up access to specialised products like pacemakers and hip replacements for customers in Africa. Previously customers would need to travel abroad for these specialist treatments, contributing to c.$1bn a year to medical tourism abroad.

Pyramid’s products are distributed across eight countries in East and West Africa. The company currently provides healthcare products to four million consumers, of which over two million are emerging, through a vast number of healthcare providers, including over 700 in Tanzania alone. This is projected to increase to eight million total consumers over the next four years of which over five million are emerging.

LeapFrog’s investment in Pyramid will support business and operational improvements, enabling the company to reach more healthcare providers and expand its product lines and services across Africa.

According to recent research, the pharma and devices market is expected to reach $60 billion by 2022; meaning that Pyramid is well positioned to deliver strong commercial and impact returns.

(Goldstein Research referencing the IFC and the World Bank; September 2017)

Goodlife Pharmacy

With a focus on “helping the nation feel better one customer at a time,” Goodlife Pharmacy’s customers have voted with their feet, helping Goodlife to become the largest pharmaceutical retail business across East Africa.

In just under four years, Goodlife has grown to provide trusted pharmaceuticals to 600,000 customers from 19 convenient locations – with a total reach of 1.2 million people.

This innovative healthcare business defies the traditional notion of the pharmacy, by delivering a truly customer-centric brand that combines pharmacy services with wellness, beauty and diagnostics. Goodlife prides itself on being the first in the market to introduce consultation centers into all its locations and will shortly be offering telemedicine.

Crucially, pharmacy is often the first point of care for Kenyans – and Goodlife is dedicated to increasing access to healthcare through its stores, thereby improving the quality of life and wellness of East Africa’s growing consumer class. The pharmacies can be found in shopping malls and gas station locations throughout Kenya, placing health services at the heart of communities and making them accessible to all income groups.

Goodlife was recently endorsed by The Pharmaceuticals Society of Kenya as best pharmacy practice in the country; a testament to Goodlife’s ongoing commitment to excellence in pharmacy practice. It is both widely recognized and trusted as a brand that delivers quality medication, in a market where substandard and counterfeit medication are yet to be rooted out.

In 2018, an independent team within IFC recognised Goodlife as having an inclusive business model as it directly reaches people at the base of the pyramid. This is something only 10-20% of IFC investments achieve.

Goodlife plans to expand to over 100 stores by 2021, reaching over 5.5 million consumers, and creating over 700 jobs, of which approximately 400 will be held by pharmaceutical professionals.

It is tapping a high-growth market, with Kenya’s pharmacy sector already worth $725m and set to rise to $1.3bn by 2020.

LeapFrog invested in Goodlife in 2016, marking it the largest direct investment in the East African pharmacy sector to-date.

“Goodlife, with its consumer focused business model, rapid growth, and excellent management team, has proven to be a fine example of how businesses that serve a real social need can be scalable and provide good financial returns,” says Dr. Felix Olale, LeapFrog Partner and Global Co-Leader for Health Investments.

The LeapFrog team brings to bear significant health industry knowledge, operational skills and international networks, and will enable Goodlife Pharmacy to accelerate its growth across East Africa, delivering best-in-class customer care to millions of consumers across East Africa.

Resolution Insurance

Resolution Insurance is Kenya’s fourth largest health insurer and a rising star in East Africa’s fast-expanding general insurance markets.

Entering the Kenyan market in 2002, Resolution was the first company to be registered as a Medical Insurance Provider. In a short time, the company grew to become a leading health insurer and a highly trusted brand, under the stewardship of an exceptional management team and entrepreneurial CEO, Peter Nduati. Today, the Resolution Group comprises Resolution Insurance in Kenya, Resolution Insurance in Tanzania and IAA-Resolution in Uganda, a partnership with IAA.

The company partners with a robust network of 800 medical service providers across East Africa, managing the diversified health insurance needs of corporates, social groups, families and individuals.

It has carved out a niche in serving the SME sector, reaching almost 50,000 emerging consumers though provision of health insurance to employees of SMEs and individual retail clients. LeapFrog’s actuarial and subject-matter experts are working with Resolution to develop new products, to stretch into broader general insurance lines, to grow its distribution network, and to strengthen its team and capabilities.

Says Peter Nduati, Resolution CEO, “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.”

Shriram

From a no-frills office behind one of the many bustling, palm-lined streets of Chennai, India’s jewel of the South, the Shriram Group began its story.

Founded in 1974, Shriram has grown to become one of India’s most respected and trusted business houses, serving the mass-market with essential services. It is a business that can convincingly claim that “the bottom of the pyramid is the top of our agenda” and has been for 40 years.

In 2011, LeapFrog invested in a Shriram subsidiary, Shriram CCL, a distribution group offering unique access to the consumer growth story across India.

Shriram stands out for its deep integrity, community-based business model, committed management team, and emphasis on the importance of long-term strategy over short-term wins. It’s there for the long haul. This is perhaps one reason it reaches 7 million people with insurance and savings today, of which 5 million are low income.

For many of its customers, Shriram CCL is also one of the first points of contact they have with the formal financial system. The company reaches people through a smart and low-cost distribution strategy, using large agency forces in local villages. It sells into traditional ‘Chit’ programs – or rotating credit and saving schemes – as well as direct to new customers in towns and villages across the country’s mind-stirring canvas.

Says G.S. Sundararajan, Managing Director of Shriram Capital, “Our strategic partnership with LeapFrog is redefining financial inclusion in India.”

In 2017, LeapFrog successfully exited its investment in Shriram CCL, after significant value-add and impact.

Syn Mun Kong (SMK)

In emerging markets, much attention is paid to the phenomenon of the mushrooming metropolis. In reality though, the economic need of those who remain in the rural areas is even more pressing. Not only are incomes lower, but rural people are very difficult to reach with essential services.

One company that is proving its ability to reach this market is Thailand’s Syn Mun Kong Insurance Public Company Ltd (SMK), the country’s second-largest motor insurer and fifth largest general insurer. SMK is one of the most distinguished and trusted names in Thailand’s insurance industry.

The company has built extensive and diverse distribution into rural and semi-urban regions of Thailand, and reaches 7.5 million emerging consumers via 2.8 million customers. The operation is run by the highly regarded Dusdeesurapoj family.

Thailand is home to a population of over 62 million people, with 41% currently low income and underserved by financial services. Investing alongside Lombard Investments (Thailand’s outstanding private equity firm) LeapFrog has created an innovative partnership that will combine Lombard’s local market know-how with LeapFrog’s operational expertise in emerging markets insurance.

Reliance Capital Management

The world’s fourth most populous nation, Indonesia’s emerging middle class alone is expected to grow to 140 million in the next 10 years. With exceptionally low insurance penetration (2.1% of GDP) and only 36% of adults with a bank account, the need for financial inclusion is great.

LeapFrog’s investment in Reliance Capital Management is aimed precisely at meeting this social need and business opportunity. A home-grown company, Reliance intends to become the financial supermarket for Indonesia’s mass-market. Founded by entrepreneur Anton Budidjaja, the group includes Indonesia’s fourth largest group health insurer, a fast growing life and general insurer insurance operations, and a listed retail-focused securities arm.

Reliance currently reaches over 4.4 million people via almost 900,000 customers across the country, with deep reach into rural areas and a trusted brand name. The company recently acquired a stake in Bank Kesejahteraan Ekonomi (BKE), a general bank with a focus on financial inclusion, giving it potential to reach a further 2 million addressable customers via cooperative relationships.

LeapFrog led this co-investment with FMO and PartnerRe, creating a partnership that will inject strategic capital and diverse skillsets to help boost Reliance’s reach to millions across the country.

Says Anton, “There is a real need for Indonesia to grow its financial services sector. LeapFrog, FMO and PartnerRe are here to help us grow, and to make an increasing contribution to the industry.”

Petra Trust

Ghana’s recently liberalised pensions industry is one of the fastest growing in the world. LeapFrog’s investment in 2014 was predicated on the shifting financial services landscape of Ghana – at the time of investment, only 19 percent of the population had ever used a formal savings product. Investing in Petra Trust was a recognition of the market potential as much as it was a vote of confidence in Petra’s dynamic leadership team.

The Petra team has a long shared history: Co-founders Kofi Fynn and Chris Hammond, and Head of Operations Helena Poku were school friends before studying in the US, at Harvard and MIT. Later they returned home to Ghana to start Petra, inspired by the social need for pensions, and the market opportunity this represented.

Launched in 2011, Petra was the first trustee approved and licensed by Ghana’s National Pensions Regulatory Authority in 2012. Today Petra is the largest independent pensions trustee in Ghana, and one of the two largest by assets under management.

Petra has benefited from LeapFrog’s support in consumer research, marketing, governance and strategy and IT infrastructure.

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.”

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. LeapFrog successfully exited in 2018.

Magma Fincorp

Magma, a trusted Indian financial services group, helps its customers to “invest in even the smallest dream”. It is currently making more than 650,000 dreams come true across India.

The company reaches emerging consumers across rural and semi-urban India with vehicle finance, housing finance and general insurance. Led by an outstanding entrepreneurial team, Magma is delivering on its original vision: to bring financial services to the unbanked in some of India’s poorest regions. The majority of customers are experiencing formal financial services for the first time.

Rural India represents an enormous market opportunity with a population of over 850 million people, roughly two-thirds of the country’s total population. Two out of five rural households rely on informal credit sources or local money-lenders that often charge usurious interest rates. Within that market, the ‘self-employed’ borrower segment is highly attractive; this group of striving entrepreneurs has generally been overlooked by non-banking financial companies but represents an exciting business opportunity to serve pent-up demand with formal financial services..

Magma is well placed in the non-banking financial services market, with its robust rural distribution network and a large and loyal customer base.

Both LeapFrog and Magma see tremendous opportunity to drive value creation through operational improvements and expansion, in both the lending business and the insurance business. This includes areas such as distribution, product design, and health insurance.

Mahindra Insurance Brokers

Back in 2009, when the Mahindra Group invited LeapFrog to invest in its Mahindra Insurance subsidiary, it was for two principle reasons: the insurance expertise LeapFrog would bring, and the shared ethos of the two organisations. Mahindra’s “Rise” philosophy, focused on building prosperity and improving lives, chimed perfectly with LeapFrog’s Profit with Purpose investment philosophy.

As Anand Mahindra, the Chairman of Mahindra Group, and world-leading businessman, put it at the time, “This partnership is a perfect alignment between our philosophy of driving positive change and LeapFrog’s socially conscious investment strategy. Together we will provide financial services that protect and enable millions of people to secure their future.”

Insurance penetration among India’s vast population remains extremely low, at 3.4% for life insurance and 0.7% for general insurance, indicative of a tremendous opportunity for growth and impact.

Mahindra Insurance is a fast-growing, high-impact company providing life, motor and health insurance. With a wide reach across rural and semi-rural India, it has a footprint in over 170,000 of India’s 650,000 villages. Mahindra Insurance currently reaches 10 million people with insurance, including 6.5 million low income consumers. The company offers insurance products for as little as $1 per month. With over 850 million people living in rural India, this is still just the beginning.

LeapFrog’s insurance expertise in this market has proved important in areas such as product development, digital and mobile strategy and market research. In fact, the Mahindra-LeapFrog partnership began with a health insurance product which has reached 550,000 people via 110,000 low income policy holders.

LeapFrog successfully exited Mahindra to XL Group in 2017 after significant value-add and impact.

Northern Arc Capital (formerly IFMR Capital)

In India the formal financial services sector has made minuscule inroads into the potential market. Smaller enterprises constitute 99% of all companies and contribute to 30% of GDP, but they lack formal access to finance, with 80% currently self-financed.

A company that is challenging this status quo is LeapFrog investment Northern Arc Capital (formerly IFMR Capital) a non-banking finance corporation. Northern Arc is a dynamic link between debt capital markets and high-quality debt originators who are the last mile link to individuals and businesses that traditionally face challenges in access to finance.

Northern Arc provides efficient and reliable access to debt for such lenders across India, in turn enabling a steady supply of finance for financially excluded families and businesses.

Since inception in 2008, the company has partnered with more than 140 institutions to impact the lives of over 33 million customers across 29 states and 540 districts across of India. The company has enabled debt financing of USD 7 billion across sectors like microfinance, small business loans, affordable housing finance, vehicle finance and agri-finance. It has structured and executed over 400 transactions which have been placed with over 120 investors.

Northern Arc uses a variety of structures to provide financing to its clients, including direct loans, securitization, guarantees, arrangement and placement of commercial paper, bonds, debentures, and other capital markets products. It invests in the debt of its originators ensuring skin-in-the-game. Northern Arc developed and launched the world’s first Multi-Originator Securitization for micro-loans and listed India’s first securitised debt instruments on the BSE. It recently introduced a fund advisory and management platform and India’s first rated (AA) financial inclusion debt fund as a Category I AIF, backed by leading insurance companies, a bank and private wealth investors.

Northern Arc also provides rating enhancement advisory services and helps originators to build better operations, oversight and customer protection. The result? End-borrowers receive quality products and services, providing the very foundation of trust.

This trust works its way back into the capital markets. Northern Arc’s robust risk management systems at the grass roots ensure strong risk-adjusted returns for investors, and an A+ credit rating for the entity.

Northern Arc Capital CEO Kshama Fernandes speaking about the reach and impact of Northern Arc, says “Northern Arc stands for access, change, freedom, growth and prosperity for all. We are the frontier that spans across the world of finance – from those who have little or no access to finance to those who have it in abundance.”