Scott Anderson

Weekly Roundup – 12/14/13: LeapFrog Investments’ sale of microinsurer to Prudential might one of biggest exits in impact investing

The NextBillion Team is still mulling our list of the biggest base of the pyramid/social enterprise deals of the year, but this one is sure to be high up on the list.

Impact investor LeapFrog Investments announced this week that it had sold its equity stake in Ghanaian insurer Express Life to Prudential PLC, one of the biggest insurance companies on the planet. Express Life sells micro-insurance and savings products to 730,000 mostly first-time buyers. LeapFrog notes that when it first invested in Express Life, the insurer was covering about 60,000 people.

For investors searching for a high-potential and highly scalable company that sells affordable goods and services to low-income people, this deal is one to bookmark.

“Our experience with Express Life demonstrates the value of specialist fund managers who can source promising investment opportunities in emerging markets and work closely with these companies to create customer and shareholder value,” Doug Lacey, LeapFrog’s lead partner in Ghana, said in a statement announcing the sale. “Now we see that they become attractive to global players also committed to building sustainable and impactful businesses.”

It comes three months after Prudential invested $10 million from its Social Investment Program into LeapFrog as part of a $204 million fund for companies developing insurance and investment products for consumers in Africa, South Asia and Southeast Asia living on $1.25 to $10 a day. LeapFrog also attracted millions more into the fund from large insurance and financial companies, including MetLife, Swiss Re, JP Morgan Chase, TIAA-CREF and the European Investment Bank, among others.

LeapFrog paired Express Life with another one of its portfolio companies, BIMA, which sells insurance through mobile phones. BIMA’s rise has been similarly meteoric, logging more than 4 million subscribers as of early this year and growing at a rate of 400,000 new members a month, according to the Financial Times. Lloyd’s 360 Risk Insight and the Microinsurance Centre have projected the potential size of the microinsurance market between 1.5 and 3 billion policies globally. That 2009 estimate included products such as health, life, agricultural and property insurance and catastrophe coverage.

We’ll see if Express Life’s track record of scale and market development continues under Prudential in a way the enhances customer value. But the financial exit, specifics of which were not released, is important for two reasons. One, it shows that impact investment financial exits – the lack of which are often lamented by the industry – are not only possible, – they can be massive (which is what I’m speculating this exit was). Two, it demonstrates what an investor can do when it connects the right portfolio companies and builds a market bridge to global players’ front doors.

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