Mahindra & Mahindra Financial Services Ltd has struck a deal to sell 15 per cent stake in its wholly-owned subsidiary Mahindra Insurance Brokers Limited to LeapFrog, a social investment fund, for $15 million (Rs 80.4 crore).
Mahindra Insurance Brokers is an insurance broker focusing on rural and semi-urban India, which is valued at $96 million as per this deal, according to a statement by LeapFrog.
In a separate disclosure, Mahindra & Mahindra Financial said it is selling 12.37 per cent stake in the insurance brokerage business for Rs 64.33 crore.
Since inception in 2004, Mahindra Insurance Brokers has serviced over 2.5 million people, majority of them in rural or semi-urban areas. LeapFrog's capital and specialist insurance expertise will enable the Indian firm to deepen and extend its presence in rural and semi-urban communities with expanded product offerings and innovative new initiatives that will transform financial inclusion for the rural poor.
Anand Mahindra, chairman of Mahindra Group, said: "Mahindra Finance is one of the largest Non-Banking Financial Companies in India and LeapFrog is the world's largest investor in insurance for the under-served consumer. This partnership is a perfect alignment between our philosophy of driving positive change and LeapFrog's socially conscious investment strategy. Together we will provide financial services that protect and enable millions of people to secure their future."
Mahindra Insurance Brokers is LeapFrog's second investment in the Indian market in the last twelve months. In 2011, July, it had invested $15 million to pick a 10 per cent stake in Chennai-based Shriram Credit Company.
LeapFrog is the world's largest investor in inclusive insurance and related financial services. Launched by former US president Bill Clinton, the fund focuses on the vast untapped market of emerging consumers in Africa and Asia. It invests up to $15 million in its portfolio companies.
Investors in LeapFrog's high impact investment fund include global banks such as JP Morgan, Triodos, International Finance Corporation, KfW, and the European Investment Bank; leading funds such as Soros EDF, TIAA-CREF, Omidyar Network, FMO, and Calvert; global reinsurers SCOR and Haverford; and development financiers including Proparco and Accion Frontier Investments Group.
In an interview with WSJ early this year, LeapFrog co-founder Jim Roth had said the firm is looking to invest around $25 million in two Indian companies by the end of the year, one of which was with an Indian business house. He had added India is presently the ‘biggest single country allotment’.
(Edited by Prem Udayabhanu)