NAIROBI – LeapFrog Investments plans to acquire a majority stake in Resolution Insurance through a Ksh1.68 billion ($18.7 million) investment. The buyout will be done through its holding company, Resolution Health East Africa Ltd, according to details of the deal released today.
LeapFrog Investments is the world’s largest dedicated private equity investor in emerging markets financial services, while Resolution Health East Africa Ltd is the holding company for Resolution Insurance, which has operations in Kenya and Tanzania and in partnership with IAA-Resolution in Uganda.
“Resolution is a strong and growing business. 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,” LeapFrog partner Dominic Liber said at a press conference this morning.
Resolution CEO Peter Nduati said LeapFrog’s dedicated operational investing approach, strong track record in health insurance, and emerging consumer expertise would add tremendous value. “Importantly, LeapFrog shares our entrepreneurial ethos and commitment to financial inclusion,” he said.
Insurance in East Africa is a high potential market, valued at Ksh180 billion ($2 billion). In particular, the Kenyan non-life insurance market is growing rapidly, at 20% per annum, fuelled by a robust health insurance sector expanding at 38%. There is a major opportunity to extend access to health and diversified insurance to millions of low-income emerging consumers across East Africa, leveraging on Kenya’s strategic position as a regional leader and gateway in.
“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,” Mr Liber said.
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 Ksh36 billion ($400 million) fund for investing in financial services businesses in Africa and Asia. Up to Ksh9 billion ($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.
