LeapFrog breaks impact investing record, with US$700mn emerging markets fund

10 May 2019

LeapFrog Investments has announced the largest-ever private equity fund by a dedicated impact fund manager, surging past its US$600mn target to reach US$700mn. The new fund invests in healthcare and financial services companies – tapping into the demand from billions of emerging consumers in Asia and Africa. This fund alone targets reaching 70 million emerging consumers. Investors include many of the world’s leading insurers, pensions and asset managers, development finance institutions, foundations and family offices. The success of the fund reflects LeapFrog’s outstanding track record of delivering both strong financial results and large-scale social impact.

“It is time for a better kind of capitalism. LeapFrog was founded on a philosophy of Profit with Purpose, rejecting conventional trade-off thinking in financial markets. That has proved a winning strategy, driving strong growth and returns while changing tens of millions of lives,” said Dr. Andrew Kuper, Founder and CEO of LeapFrog Investments. “Today’s announcement marks an unprecedented level of commitment to independent impact investment managers, with a new fund backed by diverse best-in-class institutional investors. It also marks an important moment for responsible private equity. As our third fund and largest fund, it is a decisive demonstration that meeting the real needs of under-served people is great business.”

“Prudential’s lead investment in LeapFrog’s latest fund underscores our conviction in the power of capital-based solutions to solve the financial, social, environmental, and economic challenges of our changing world,” said Charles Lowrey, Chairman and Chief Executive Officer of Prudential Financial, Inc. “We are pleased to partner with LeapFrog to realize the enormous potential for inclusive growth and shared prosperity in emerging Asia and Africa.”

LeapFrog has invested in 26 businesses to date. They have grown at an exceptional rate of nearly 40 per cent a year on average from the time of investment. LeapFrog companies now reach 168 million people across 35 countries with healthcare or financial services. Over 136 million of those individuals are emerging consumers – defined by The World Bank as living on under $10 a day. Most are accessing quality insurance, savings, pensions, credit, remittances, medicines or healthcare services for the first time.

LeapFrog’s new fund has already made five investments: WorldRemit is the leading digital remittances provider globally. NeoGrowth provides innovative unsecured-credit products to micro, small and medium enterprises across India. Goodlife Pharmacy chain is now the largest provider of healthcare services in East Africa. Pyramid Pharma is a distributor of medicines and diagnostic and surgical equipment across Africa. And Ascent Meditech manufactures and delivers orthopaedic products across India that help avoid crippling pain. These businesses use innovative marketing or distribution via mobile phones to reach millions of customers not well-served by conventional companies.

This is LeapFrog’s third fund and it will once again be oversubscribed. Most backers are repeat investors with LeapFrog. They include:

  • Global insurers Admiral, AIG, AXA XL, Everest Re, Hannover Re, Prudential Financial, QBE and Zurich
  • Leading pensions and asset managers such as Ascension Capital, TIAA-Nuveen (USA), Kempen, Partners Group Impact, as well as Christian Super and HESTA (Australia)
  • Leading development financiers such as Germany’s DEG, IFC and France’s Proparco; also a board-approved commitment from the U.S.’s Overseas Private Investment Corporation
  • Major corporations such as Merck & Co., Inc., known as MSD outside U.S. and Canada, and foundations including PactWorld, the Ford Foundation and the Rockefeller Foundation

The new fundraise will take LeapFrog to $1.6bn of total commitments, sustaining its position as the largest private equity manager entirely dedicated to impact investing.

“As pioneers of commercial impact investing, our goal over the last decade has been to build truly differentiated investment vehicles, that present a compelling opportunity for top-tier investors to access emerging markets – and fulfil their financial and purpose objectives,” said Nick Moon, LeapFrog Partner and Head of Investor Relations. “We have been delighted with the enthusiasm for this latest fund from longstanding as well as first-time investors.”

The fund also received strong backing from global leaders in development finance. “OPIC is committed to supporting breakthrough investment in developing countries. LeapFrog is a compelling fund manager and strong partner for deploying capital into successful companies to bring large-scale impact,” concluded David Bohigian, Acting President and CEO of OPIC. “We are very pleased to be a lead investor in this new fund for emerging markets in Asia and Africa. This will expand the reach of development finance through investments in innovative portfolio companies that will serve millions of new consumers in the developing world.”

“We want to substantially increase impact investing for a sustainable world – so we are delighted to be supporting the largest equity fund by a dedicated impact manager in emerging markets,” said Philippe Le Houérou, CEO of IFC, the private sector arm of the World Bank Group and a lead investor in the new fund. “By investing in this fund, IFC is expanding our long-standing partnership with LeapFrog and together we will drive this investment toward financial inclusion and health access. We want more and more investors who are looking to do well while also doing good.”

Additional Investor quotes:

“QBE shares Leapfrogs’ passion for mobilising capital in order to both unlock value and drive better social outcomes through impact investing, and we are delighted to have this opportunity to partner with Andy and his team through this fund,“ said Gary Brader, Group Chief Investment Officer, QBE.

“As one of the world’s largest private-sector development financiers, we see LeapFrog as a trusted partner to deliver both returns and impact based on a deep understanding of the emerging markets in which they operate and the high growth companies they are able to originate and grow,” said Ingo Schulz, Vice President, DEG. “We are delighted to partner with them in their latest fund.”

“Proparco is proud to once again partner with LeapFrog and to invest in its third impact fund that will support companies offering high-quality financial and health services accessible to all” said Grégory Clemente, CEO of Proparco, a subsidiary of Agence Française de Développement (AFD) focused on private sector development. “In fact, the fund’s investment to-date in high growth financial and health companies have put it on a solid path to contribute in driving inclusive growth in emerging markets”.

“HESTA is very proud of our long-term partnership with LeapFrog, whose profit with purpose ethos closely aligns with our vision to achieve strong long-term investment returns for members while also having a positive impact on the world they live in today and will eventually retire into. We share with LeapFrog a belief that large global investors like HESTA can help drive meaningful change for generations to come through supporting innovative, sustainable development solutions to key challenges facing our world today,” said Debby Blakey, CEO, HESTA.

“The Foundation is thrilled to build on its legacy in the impact investing sector by supporting LeapFrog’s latest fund,” said Dr. Rajiv J. Shah, President of The Rockefeller Foundation. “The Foundation’s investment, tied to a bespoke insurance product that underpins the Fund’s structure, epitomizes the role catalytic capital can play in accelerating impact investing and helping low income people access financial services and healthcare.”

“Christian Super has a long track record of investing for financial return and social impact, and we’re proud to continue that tradition with our investment in Leapfrog III. Access to health and financial services are a crucial part of human flourishing, and the market-driven solutions in those sectors that Leapfrog has successfully invested in are impactful, profitable and, most importantly, scalable. Leapfrog, and others like them, demonstrate on a daily basis that genuine impact and strong financial returns can go hand in hand,” said Ross Piper, CEO, Christian Super.

“Ford Foundation has dedicated $1 billion to mission-related investing to tackle large-scale problems facing the world. LeapFrog’s latest fund provides an ideal opportunity to access catalytic and innovative finance initiatives, via high growth companies seeking to deliver financial inclusion at scale,” said Christine Looney, Deputy Director of Mission Investments, Ford Foundation.

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