LeapFrog Buys Majority Stake in Kenya’s Resolution Insurance

LeapFrog Investments, the private equity firm with a focus on Africa and Asia, said it will pay 1.68 billion shillings ($19 million) to gain control of Kenya’s Resolution Insurance and tap growth in health coverage.

LeapFrog will invest through Resolution Health East Africa Ltd., the holding company for the Nairobi-based insurer, the private equity firm said in an e-mailed statement today, without disclosing the size of its stake. “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 said.

Resolution Health East Africa entered Kenya in 2002 and its medical insurance unit has operations in Tanzania and a partner in Uganda. LeapFrog sold a minority stake in Kenya’s Apollo Investments Ltd. to Swiss Re AG on Oct. 8, exiting an investment made with its first round of funding. The Resolution purchase comes from Fund II, which raised $400 million in August.

“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,” Dominic Liber, a LeapFrog partner, said in the statement.

The acquisition may help Resolution boost annual revenue to 33 billion shillings by 2019 from 3 billion shillings now, Chief Executive Officer Peter Nduati told reporters today in the Kenyan capital, Nairobi.

“This investment will help us do two things; look at alternative distribution and secondly it gives us the opportunity to explore and dream,” he said.

The company will delay plans to begin trading its shares on the Nairobi Securities Exchange by 2016, Nduati said. “It is still in our strategic plan,” he said.

LeapFrog has invested about $30 million in India’s IFMR Capital from Fund II and said it has as much as $100 million earmarked for East African investments.

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