MICROCAPITAL BRIEF: LeapFrog Takes 15% Stake in Mahindra Insurance Brokers for $15m in Effort to Boost Impact in Rural India

LeapFrog Investments, a for-profit private equity fund that invests in microinsurance, recently made its second investment in India in the past year by taking a 15-percent equity stake in Mahindra Insurance Brokers Limited (MIBL), an Indian insurance brokerage firm dedicated to serving rural Indians. This INR 804 million (USD 15 million) investment is intended to reach millions of rural Indians with coverage of their assets and loans. LeapFrog will increase its presence in the Indian market while Mahindra hopes to gain from LeapFrog’s knowledge of “product design and distribution” methods. According to Andrew Kruper, one of LeapFrog’s founders, only 4.7 percent and 0.7 percent of the Indian population is covered by life and non-life insurance, respectively, indicating that there is significant potential in the Indian insurance industry [1,2].

MIBL is a wholly-owned subsidiary of Mahindra & Mahindra Financial Services Limited, an Indian non-bank institution offering financial services to rural and semi-urban populations. Established in 2004, MIBL has served approximately 2.5 million individuals and is valued at approximately INR 5.2 billion (USD 100 million). LeapFrog, founded in 2007 and based in Mauritius, is an investment fund focused on serving the poor in Africa and Asia through microinsurance and related financial services. As of 2012, it reports total assets of USD 135 million reaching nearly 8 million people in six countries.

By Sarah Benali, Research Associate

About Mahindra Insurance Brokers Limited Established in 2004, Mahindra Insurance Brokers Limited (MIBL), a wholly-owned subsidiary of India’s Mahindra & Mahindra Financial Services Limited, is an Indian insurance brokerage firm dedicated to serving rural areas. MIBL has served approximately 2.5 million individuals and is valued at approximately INR 5.2 billion (USD 100 million) as of 2012.

About LeapFrog
LeapFrog Investments, which was founded in 2007 by Dr. Andrew Kuper, is a for-profit private equity fund aimed at earning large returns by investing in and supporting microinsurance initiatives. LeapFrog’s investors include the European Investment Bank, the Omidyar Network, Dutch development bank FMO, Accion, Calvert Foundation, the International Finance Corporation (IFC), German development organization KfW Bankengruppe, Flagstone Reinsurance and the Soros Economic Development Fund. LeapFrog team members have also committed USD 1 million of their personal money to the fund. Based in Mauritius, the fund focuses on microinsurance ventures in Africa and Asia, with initial target countries including South Africa, Kenya, Ghana, India, Indonesia, Pakistan and the Philippines. As of 2012, LeapFrog Investments reports total assets of USD 135 million reaching nearly 8 million people in six countries.

About Mahindra & Mahindra Financial Services Limited
Mahindra & Mahindra Financial Services Limited (Mahindra Finance), part of India’s Mahindra Group, is a non-bank financial service company. It provides insurance coverage to the rural and semi-urban markets of India, and it employs 9,700 individuals. It also provides finance for vehicles and tractors. As of March 2012, Mahindra Finance reports total assets of INR 1.86 trillion (USD 35.8 billion), return on assets of 3.34 percent, return on equity of 2.1 percent and serves approximately 200,000 customers. Mahindra Finance also reports deposits of INR 10.6 billion (USD 205 million) to 85,000 depositors.

Sources and Additional Resources

[1] Indus Business Journal: “LeapFrog invests $15m in partnership with Mahindra to provide insurance to rural India,” September, 2012, http://www.indusbusinessjournal.com/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=B19582F9A0CF4A1198EC07685123CCC5

[2] Mahindra Insurance Brokers Limited News Media Release: “LeapFrog nets 15% stake in Mahindra Insurance,” September, 2012, http://www.mahindrainsurance.com/images/Leapfrog-nets-15-stake-in-Mahindra-Insurance.jpg

[3] Mahindra Insurance Brokers Limited Press Release: “Mahindra and LeapFrog in Strategic Partnership to Design and Deliver Insurance Solutions to Millions in Rural India,” September 2012, http://www.mahindrainsurance.com/press_release_1.asp

MicroCapital.org Story: “MICROCAPITAL BRIEF: LeapFrog Acquires Majority Stake in Ghana’s Express Life Insurance for $5.5m,” https://www.microcapital.org/microcapital-brief-leapfrog-acquires-majority-stake-in-ghanas-express-life-insurance-for-5-5m/

MicroCapital Universe Profile: LeapFrog
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=LeapFrog+Investments

MicroCapital Universe Profile: Mahindra Insurance Brokers Limited
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Mahindra+Insurance+Brokers+Limited

MicroCapital Universe Profile: Mahindra & Mahindra Financial Services Limited
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Mahindra+Finance

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