LeapFrog Investments to inject GH¢375m into rising services sector

The country’s growing financial services sector could be boosted by investments totalling up to GH¢375million (US$100m) from a new fund announced by LeapFrog Investments. The GH¢1.5billion (US$400m) fund will invest in high growth businesses in Africa and Asia.

LeapFrog is the world’s largest dedicated equity investor in emerging markets’ financial services, with partner companies serving 22.7 million people across 16 countries. Ghana is a priority country for the firm.

“With its liberal, stable market and forward-looking investment climate, Ghana is a regional leader,” said LeapFrog partner Doug Lacey. “Given the vast number of consumers demanding financial tools for the first time, the Ghanaian financial services sector is an exceptional investment opportunity.”

While Ghana’s economy is growing fast, less than 16% of Ghana’s 20 million consumers save at a financial institution and only 5% have insurance. But recent regulatory reforms have helped to make these products available to the majority of the population for the first time.

As a result, there is rapidly expanding demand for financial services. The pensions market, for example, is expected to expand by 400% in the next four years.

An early pioneer of insurance in Ghana, Lacey has over 30 years executive experience in insurance in Africa and was recently named a Top-10 Industry Leader by Africa Asset Management.

“With our new fund we’ll be looking to invest in financial services businesses with strong management teams, a focus on the emerging consumer, and an appetite for growth and profitability,” he said.

LeapFrog’s fund will make equity investments of up to GH₵180m in any one company. These must be established businesses that deliver insurance, savings, pensions, investments, credit, remittances or payments.

LeapFrog has a strong track record in Ghana. In 2012 LeapFrog took a majority stake in leading life insurer Express Life, in what was at the time the largest private foreign investment in Ghana’s insurance industry.

In March 2014, after successfully building the company, LeapFrog sold its stake to Prudential PLC, which was making its first step into insurance in Africa. And earlier this year LeapFrog took a 25% stake in leading independent pension provider Petra Trust.

Kofi Fynn, Managing Director of Petra Trust said: "We decided to partner with LeapFrog because we found them to be unique for the specialist, hands-on operational support they offer to company leaders. LeapFrog is helping us build our reach into new markets and into the emerging consumer market in particular. They have extensive experience and deep know-how."

Backers of the new LeapFrog fund include leading development financiers CDC, DEG, EIB and FMO; six of the world’s leading insurers; three of the world’s leading reinsurers; major pension funds; and global asset managers.

LeapFrog Investments is the world’s largest dedicated equity investor in emerging markets financial services, with over half-a-billion dollars assets under management.

LeapFrog invests in high-growth companies across Asia and Africa offering empowering tools such as insurance, savings and investment products to emerging consumers. Portfolio companies currently serve over 22 million people across 16 countries.

LeapFrog's distinctive Profit with Purpose investment philosophy has attracted many of the world’s leading insurers, reinsurers, global asset managers, pension funds and development financiers.

LeapFrog, with over US$500million of assets under management, has small-ticket investments in companies providing insurance, savings, pensions and payments services -- usually for customers earning under US$10 a day.

It estimates that, worldwide, the annual collective spending power of such customers will rise to US$5trillion by 2022 from around US$2trillion in 2012.

It also invests in markets most players refrain from. For example, it has a stake in South Africa's All Life which provides insurance cover to HIV patients.