Leapfrog Investments in talks to invest $20M in local firm

MANILA, Philippines - Leapfrog Investments, a foreign fund manager is ready to invest up to $20 million in a Philippine company willing to practice micro-insurance and is already in talks with life and non-life insurance companies in a bid to “seal a deal before the end of 2011.”

Leapfrog partner Stephane Chatonsky said the fund is worth $135 million but the initial allocation for the Philippines is from $5 million to a maximum $20 million.

“We want to finish (the deal) by 2011,” Chatonsky told reporters in a presentation yesterday.

He said they are in discussions with several life and non-life insurance companies that are already practicing microinsurance or are interested in microinsurance. Also in the shortlist are microfinance institutions (MFIs), non-government organizations (NGOs), and retail stores.

“That is where the largest potential lies for both financial returns and social impact,” Chatonsky said.

He said Leapfrog seeks to acquire up to 49 percent equity of an existing player.

“We want to sit in the board so that we may be able to implement our microinsurance program,” said Dominic Liber, Leapfrog co-partner.

Aside from the Philippines, Leapfrog is targeting Indonesia and India in Asia. It has already made investments in Kenya, Ghana, Nigeria and South Africa.

“The Philippines is ripe for microinsurance development since the regulatory environment is perfect and there are many players,” Chatonsky said.

They expect that the venture capital will realize return on its investments within four to seven years. “That is when we can make an exit.”

Also known as profit-with-purpose, the venture capital expects decent returns from its investments, but also wants to make sure that there is a strong social dimension.

Its target market is the lower to middle income population, or a segment of the Philippine population that is earning marginally.

Studies have shown that the investment potential for microinsurance up to $40 billion.

Leapfrog is a global venture capital fund seeking investments with a strong social dimension. Among its global investors include the International Finance Corp. (IFC), Soros Economic Development Fund, German Development Bank (KfW), JP Morgan, Accion, the Omidyar Network (created by eBay founder Pierre Omidyar), European Investment Bank (EIB), and major reinsurers Flagstone Re and SCOR.