Deal focus: Bolttech benefits from running start

Singapore-based insurance technology start-up Bolttech has enjoyed a vertiginous rise, accumulating equity commitments of approximately USD 500m in the space of two years. By the time of its Series B round 12 months ago, Bolttech was already valued at USD 1.5bn.

Investors represent a broad swath of geographies, from Khazanah Nasional in Malaysia, Tokio Marine in Japan, and EDBI in Singapore to Activant Capital in the US, Alpha Leonis Partners in Switzerland, and Mundi Ventures in Spain. This reflects an extensive geographic footprint that encompasses more than 30 markets, and it also offers clues as to the company’s ascent. Bolttech was bought as much as built.

“The company didn’t start from zero – it was an amalgamation of existing businesses. For example, licenses for digital and offline insurance were acquired from FWD covering Thailand and Hong Kong. Then there was AmTrust Mobile Solutions, a sizeable existing company in the device protection space,” said Fernanda Lima, a partner and head of financial services at LeapFrog Investments.

“These happened before or around the Series A. Since the Series B started, there has only been one acquisition – AIA’s insurance broking business in Singapore, and that wasn’t a big deal.”

LeapFrog recently invested USD 50m in Bolttech, extending the Series B round to USD 246m. The impact angle was straightforward: Mobile phones are crucial to financial inclusion and Bolttech, as a provider of device insurance, keeps them in circulation. Beyond the provision of financial services, mobile devices can be a source of income – for example, as a Grab driver – and a point of access for healthcare.

“There are already around 3m clients in Vietnam, the Philippines, Thailand, and Indonesia, and two-thirds of them are in lower middle-class segments. Looking at the trajectory of the company in those markets alone, we see 3x growth potential. If Bolttech is interested, we have portfolio companies across Africa, Latin America, so we could help it expand into these markets,” said Lima.

“We found that, even in developed markets, Bolttech serves communities that aren’t necessarily from those markets. Over half the policies issued in Singapore are for foreign workers and migrants.”

The insurance licenses used to seed the business came through Pacific Century Group, a Hong Kong-based investor that owns FWD. Lima described Pacific Century – which is not the majority shareholder – as one of several resourceful shareholders. She also credits company management for its execution capabilities and “being aligned with shareholder objective of scalability in a short period of time.”

Bolttech’s predominantly asset-light business model has facilitated this rapid scaling. The company operates under the managing general agent (MGA) or wholesale broking model, using its platform and network to connect insurance underwriters with distributors and their customers. It claims to facilitate USD 55bn in quoted premiums annually, working with 230 insurers and over 700 distribution partners.

These distribution partners could be original equipment manufacturers (OEMs), telecom providers, or finance companies – any group that wants to open new revenue streams and deepen existing customer relationships. It is also possible for partners to leverage Bolttech’s technological expertise, embedding the company’s application programming interfaces (APIs) into their own offerings.

According to Lima, the MGA business expanded so quickly because Bolttech targeted acquisitions that brought large existing distribution relationships. “They grew those partnerships and now some of them are multi-country, like LG Corporation, Samsung, and Home Credit,” she added. “The execution was strong, the technology and integration worked well.”

The expansion into device insurance – there are currently more than 5.6m active policies – gave Bolttech the impetus to become an insurer in its own right. The company has underwriting licenses in the US and Hong Kong as well as a reinsurance operation. This allows it to oversee the entire customer journey and keep a larger share of the economics than would be available to a pure broker.

When LeapFrog was underwriting its investment in Bolttech, expansion into new markets was not factored in. Rather the focus was on consolidating existing geographies. After all, the private equity firm found no competitor that matched the breadth of Bolttech’s product suite across the same range of markets. The general tendency is to pursue global coverage within specific verticals.

The LeapFrog portfolio also features PasarPolis, an Indonesia insurance technology player backed by the likes of Chinese electronics giant Xiaomi and local digital services player GoTo. The company does embedded insurance, provides coverage for devices, and recently obtained a general insurance license. Automotive insurance products are currently under development.

“They are going deeper into one market. Bolttech is different in that we haven’t found anyone doing what they are doing at the same scale – a multi-market strategy with high margins and strong growth,” Lima said.

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• Topics
• Southeast Asia
• Expansion
• Financials
• Technology
• Singapore
• insurance
• Fintech
• LeapFrog Investments