LeapFrog eyes acquisitions in Kenya’s financial sector

Mr Joseph Kinyua, the former Finance permanent secretary. FIL

By GEORGE NGIGI

In Summary

• LeapFrog Investments has set aside a Sh4.4 billion war chest targeting acquisitions in Kenya’s financial sector.
• The private equity fund has termed Kenya as one of its priority markets.
• Kenya has recorded increased investments by PE funds in the recent months, underlining increased confidence in the economic growth of the country. 

Private equity fund, LeapFrog Investments, has set aside a Sh4.4 billion war chest targeting acquisitions in Kenya’s financial sector.

The fund made the disclosure after raising Sh17.3 billion ($204 million) for investment in Africa and Asia, terming Kenya as one of its priority markets.

In 2011 Leapfrog invested Sh1.2 billion in APA Insurance after it pooled Sh11.5 billion ($135 million).

“We could earmark up to $50 million for investment in Kenya, this could be into one investment or spread across a number of investments in the financial services industry,” said Doug Lacey, a partner at LeapFrog in an interview.

The private equity (PE) fund set an investment timeline of between four to seven years before exiting APA Insurance.

Some of the investors in LeapFrog’s PE fund include billionaire George Soros through his Soros Economic Development Fund, World Bank’s investment arm IFC, German’s KFW, Netherland’s FMO and French Proparco.

Other investments held by the private equity fund include South Africa’s AllLife which insures people living with HIV/Aids, Express Life in Ghana and Nigeria’s ARM Life.

Kenya has recorded increased investments by PE funds in the recent months, underlining increased confidence in the economic growth of the country. 

Some of the sectors that the PE funds have invested in include transport, real estate, and information technology.

International auditors Deloitte and Touche had in their 2013 Private Equity Fund report stated that they expected increased investments in East Africa, especially Kenya, with financial services being a major attraction.

Support services

“In Eastern Africa, financial services is still the sector most investors are interested in, followed by support services, real estate and construction,” read the report.

Kenya’s financial sector has been growing driven by its burgeoning middle class and innovativeness leading to increased uptake of financial products.

Insurance and banking sectors have been the main attraction as their companies sought to inject additional capital in line with new rules.

Early this year three private funds, Aureos Africa Fund, AfricInvest Fund and Swedfund International AB invested Sh4.7 billion in UAP Insurance Group.