A commercial street in Juba, South Sudan. Leapfrog sold its 26.9 per cent stake in Kenya insurer Apollo Investments to Swiss Re. Apollo is looking to expand into South Sudan and Ethiopia. PHOTO | MORGAN MBABAZI
Leapfrog Investments, the bottom-of-the-pyramid-focused private equity investor, appears to have made a tidy fortune by ceding its 26.9 per cent stake in Kenya insurer Apollo Investments to Swiss Re Direct Investment Company Ltd (Swiss Re).
Despite financial details of the transaction not being disclosed, some proxies provide a clue to the consideration that the subsidiary of the world’s second largest underwriter, Swiss Re, paid.
Leapfrog, whose funds are patronised by the world’s richest men like George Soros and Warren Buffet, acquired the stake in Apollo Investments in 2011 for $13.5 million.
Disclosures at the time showed that Apollo Investments had gross written premiums of $45 million and total assets of $91.6 million. The entry of Leapfrog, as was to be expected, helped Apollo Investments expand in the micro-insurance market.
As Swiss Re comes in, Apollo’s written premiums have increased by 62 per cent to $73 million and its asset base by 142 per cent to $222 million.
In the year to June 2013, shareholder funds grew by 40 per cent to $42.3 million, with a return on equity of 37 per cent. Profit before tax doubled to $6.8 million.
Apollo Investments is now looking to benefit from the expertise and reputation that comes from having Swiss Re as a long term investor.
“We are expecting support in organisation, broad strategy, management and governance. It gives our group credibility,” Apollo Investments Group CEO Ashok Shah said.
Swiss Re Direct will get one seat on the Apollo board of seven directors, three of them independent. Mr Shah said Apollo was looking for acquisition opportunities in markets like Ethiopia and South Sudan.
His one wish is that East African governments remove restrictions on foreign ownership of insurance companies to help global players invest in the region where the uptake of insurance is quite low.
Apollo has operations in Kenya, Uganda and Tanzania and is the first insurance company in sub-Saharan Africa that one of the top global insurers has taken an interest in.
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