LeapFrog Investments an emerging market (EM), focused private equity fund, has taken up a stake in ARM Pension managers, according to Bloomberg. Terms of the deal, however, were not disclosed.
The firm has reportedly acquired the stake held by Helios another private equity firm, ThisDay revealed. Helios bought a minority stake in ARM Pensions for $50 million in 2014. There are currently 21 Pension Fund Administrators (PFAs) in the country.
Room for growth
Nigeria’s pension industry still has room for growth as contributions remain largely from the organized private sector and civil service. Micro pension schemes for the informal sector are yet to take off.
March 2018 figures by the National Pension Commission (PENCOM) put the total number of Retirement Savings Account (RSA) registrations at 7.9 million. Recent figures by the National Bureau of Statistics (NBS) put the number of employed and underemployed at 69 million.
PENCOM has also demonstrated a low tolerance for infractions. The regulator, in March this year, fined several operators billions of Naira for having sub-optimal returns.
ARM Pensions plays a dominant role
The top 5 PFA’s (inclusive of ARM) continue to dominate a large share of the market. Data from PENCOM shows the top 5 PFAs accounted for 54% of RSA registrations. The top 5 PFAs also accounted for 66.64% of total RSA assets under management as at the fourth quarter of 2017.
Recent transactions
Stanbic IBTC Holdings in March 2017, bought a 17.65% stake in Stanbic IBTC Pension Managers Limited (SIPML) from Access Bank for N16.25 billion, according to disclosures in its financial statements for the year ending December 2017.
The exit was due to a directive by the Central Bank of Nigeria (CBN) for banks to exit non-core businesses or form a holding company (Holdco).
FCMB Group Plc in November, 2017, completed the acquisition of an additional 60 percent equity stake in Legacy Pension Managers Limited increasing its interest in the firm to 88.2%. The bank in its FY 2017 conference call also indicated the PFA would play a key role in its performance going forward.
LeapFrog Investments was founded in 2007 by Andy Kuper and Jim Roth. The company focuses on emerging markets and has attracted over $1 billion in funding since inception from prominent firms such as the International Finance Corporation (IFC), J.P. Morgan, AXA Mansard and Swiss Re. The firm in February 2018, exited from Petra Trust, a Ghanian pension operator. It acquired the holding in 2015.
ARM Pensions is a subsidiary of Asset & Resource Management Company Limited (ARM). The company was one of the first 7 Pension Fund Administrators (PFAs) awarded licences by PENCOM in December, 2005. The firm currently has over $1.8 billion in assets and over 700,000 RSA holders.
Aside from ARM, other shareholders include the African Reinsurance Corporation, ARM Pension Managers Staff Investment Trust, and several individual Nigerian shareholders as a result of a merger with First Alliance Pension & Benefits Limited.
Results for the financial year ended December 2017 show revenue increased from N6.5 billion in 2016 to N8.1 billion in 2017. Profit before tax rose from N3.6 billion in 2016 to N4.3 billion in 2017. Profit after tax also moved from N2.5 billion in 2016 to N3.0 billion in 2017.