LeapFrog invests in Ghana pension firm Petra Trust

LEAPFROG Investments, a specialist investor in microinsurance in Africa and Asia, has invested in one of Ghana’s largest pension-trustee companies in expectation of the market growing four-fold in the next four years.

LeapFrog, the world’s first private-equity fund focused on microinsurers, has taken a 25% stake in Petra Trust, Doug Lacey, the partner who leads LeapFrog’s Ghanaian investments, said on Friday.

This is LeapFrog’s first investment in the African pensions sector, which is forecast to grow 400% in the next four years from $484m in 2012, according to Ekow Fynn-Aikins, regulations officer at the National Pensions Regulatory Authority in Accra, as quoted by LeapFrog.

Outside South Africa, only about 5% of Africans have pensions coverage.

Speaking from Ghana’s capital, Accra, Mr Lacey said this expected growth stems from more liberal pension-fund regulations and the rapid expansion of the African middle class. "The opportunities in Ghana are enormous as it’s a nascent industry," he said.

Ghana passed the Pensions Act in 2008, but a regulator was only appointed in 2011, and only then could the pension-fund industry start operating. The act allows for the informal sector to invest in pension funds, which is of interest to Leap Frog, with its mandate to grow financial services to emerging consumers.

Petra Trust opened in late 2011 and is now one of the top three out of the six registered trustee funds, said Mr Lacey.

Petra co-founders, Kofi Fynn and Chris Hammond, and head of operations Helena Poku, were educated in the US and returned to Ghana to set up a pensions company, attracted by the new regulations, Mr Lacey said. "They have a strong set of existing clients, and plans to serve a local market of 20-million consumers in the informal and semiformal sectors, which account for some 90% of Ghanaian employees," he said.

The capital would be used to invest in infrastructure, upgrade systems and expand beyond Accra to other parts of the country. It was too soon to say how long LeapFrog would remain invested in Petra, said Mr Lacey.

LeapFrog is four years and one month into the life of its first 10-year fund.

"There is a strong possibility that regional players will start understanding the opportunity in the market and that could potentially impact on how long we hold the investment for," he said.

LeapFrog sold its stake in Ghana’s Express Life to UK insurer Prudential in December. That was the first exit for LeapFrog, which raised its debut $135m fund in 2008 and is invested in firms providing insurance, savings and pensions products to India, Indonesia, Sri Lanka, Nigeria, Kenya, and South Africa.

In September last year, LeapFrog said it has raised $204m for the first close of its second private-equity fund. Its first investment, four years ago, was R50m in AllLife, a provider of life insurance for HIV-positive South Africans.

Source: www.bdlive.co.za

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