LeapFrog Investments, a US-based private equity (PE) firm, is betting big on the Indian insurance sector. LeapFrog, which has made two deals in India so far, appointed Michael Fernandes, former India head of Khazanah Nasional, as partner (Southeast Asia), in December 2012.
In September 2012, LeapFrog had acquired a 15 per cent stake in Mahindra Insurance Brokers Ltd for Rs 80 crore. LeapFrog, which invests in companies that provide insurance, savings, or investment products to customers, had also invested about Rs 67 crore in Shriram CCL, a financial services distribution firm, last year.
At Khazanah Nasional, the sovereign wealth fund of the Malaysian government, Fernandes was responsible for over $700 million of direct investments in India, including Yes Bank and L&T Finance.
Jim Roth, co-founder and partner, LeapFrog , said, “India is a critical growth market, which is under penetrated.”
Three of LeapFrog’s eight partners are focused on south Asia. Besides Fernandes, Stewart Langdon, another partner in the firm, who co-lead the Shriram and Mahindra deals, is also focused on south Asia. LeapFrog, which handles $135-million, makes investments between $5 and $20 million.
“In 2013, we will continue to make new investments as well as support our existing portfolio companies to grow their businesses, and we currently have a number of south Asian deals in our pipeline. While the details of our pipeline are confidential, India continues to be a key focus geography,” added Roth.
According to Roth, market education and distribution of financial services, especially when serving rural clients, is a challenge in India.
Other major deals in insurance sector include Sequoia Capital’s $135 million investments in Star Health & Allied Insurance in 2010 and Orient Global Tamarind’s $55-million deal with India Infoline Marketing Services in 2008.