PE fund eyes Kenya insurance companies after Sh35bn boost
Kenya’s attractiveness is supported by the market’s sophistication, despite low coverage, and transparency of financial disclosures relative to its sub-Saharan Africa peers. PHOTO | FILE
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The New Jersey-based Prudential Financial Inc (PFI) on Friday announced the partnership with LeapFrog, saying the cash will be spent on deals across Kenya, Nigeria and Ghana over the next three to five years.
Private equity firm LeapFrog Investments has secured $350 million (Sh35.7 billion) funding from a US-based insurer, part of which will be used to acquire a stake in life insurance firms in the country.
The New Jersey-based Prudential Financial Inc (PFI) on Friday announced the partnership with LeapFrog, saying the cash will be spent on deals across Kenya, Nigeria and Ghana over the next three to five years.
LeapFrog, which in February last year bought a majority stake in Kenya’s Resolution Health for Sh1.7 billion, says it is already in negotiations with some local firms and hopes that the first deal will be announced by the end of the year.
“We will be looking for investment opportunities that are weighted towards life insurance but we could also look into general life business in future,” said Doug Lacey, a partner at LeapFrog, in a telephone interview.
“The population base in Kenya is large but the life insurance penetration levels remain low. That coupled with the enabling digital space and good labour skills make Kenya an attractive market,” he added.
PFI, which is an investor in LeapFrog’s investment vehicle Financial Inclusion II, did not disclose the specific amount of money they plan to channel into Kenya, saying it would be based on the kind of opportunities available.
The firm, which has operations in US, Asia, Europe and Latin America, deals in life insurance, annuities, retirement-related services, mutual funds and investment management. PFI is not related to UK-based Prudential Plc which operates in Kenya as Shield Assurance.
Kenya’s insurance penetrations remains low, with data showing it stands at 2.8 per cent, which is below that of countries like South Africa with a 14.1 per cent penetration rate.
A recent report by global credit ratings agency Fitch Ratings stated that Kenya’s insurance sector had matured compared to other African economies and is ripe for foreign investment.
Fitch said Kenya’s attractiveness is supported by the market’s sophistication, despite low coverage, and transparency of financial disclosures relative to its sub-Saharan Africa peers.
“This investment expands PFI’s footprint into Africa, a continent that we believe offers tremendous potential for growth over the long term,” Charles Lowrey, the executive vice president of PFI’s international businesses, said in a statement. LeapFrog early last year finalised the Resolution Insurance buyout just months after exiting Apollo Investments.
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