LeapFrog breaks impact investing record with US$700 million fund
Largest-ever private equity fund by dedicated impact fund manager invests in healthcare and financial services companies that target 70 million low-income consumers
LeapFrog Investments has announced the largest-ever private equity fund by a dedicated impact fund manager, surging past its US$600 million target to reach US$700 million. 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 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.
“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,” says 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,” says Charles Lowrey, Chairman and Chief Executive Officer of Prudential Financial, Inc.
LeapFrog has invested in 26 businesses to date, which have grown at a rate of nearly 40 percent 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 a digital remittances provider. 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. Ascent Meditech manufactures and delivers orthopaedic products across India. These businesses use 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, Pinebridge and TIAA-Nuveen (USA), Kempen, Partners Group Impact, Stiftung Abendrot and SBZ (Europe) 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 US’s Overseas Private Investment Corporation
- Major corporations such as Merck & Co., Inc., and foundations including PactWorld, the Ford Foundation and the Rockefeller Foundation
The new fundraise will take LeapFrog to US$1.6 billion in 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 fulfill their financial and purpose objectives,” says 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. “LeapFrog is a compelling fund manager and strong partner for deploying capital into successful companies to bring large-scale impact,” concludes 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,” says Philippe Le Houérou, CEO of IFC, the private sector arm of the World Bank Group and a lead investor in the new fund.
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