LeapFrog jumps to $400m fundraise

Having closed its second fund last week at $400 million, LeapFrog - which is backed by George Soros and J.P. Morgan Chase - has a renewed mandate to support high-growth financial services companies that will provide these tools.

The fund launched in January 2013 and arrived at a first close of $204 million the following September.

LPs that signed up in the first round included MetLife, Prudential, XL Group, Achmea, PartnerRe and Swiss Re, as well as developmental financial institutions CDC Group, DEG, the European Investment Bank and FMO. The vehicle came in oversubscribed as AIG, Alliance Trust, AXA, HESTA, RGA Reinsurance and Zurich Insurance Group followed up with commitments.

Kuper says LPs were motivated to invest for a variety of reasons, including "a recognition of the enormous opportunity presented by the emerging consumer market, the demand for financial services by this market, and by LeapFrog's philosophy of ‘profit with purpose.'"

With an addressable market that comprises billions of people in need of affordable financial services covering insurance, savings, pensions and payments, LeapFrog breaks down its target companies into three major groups: financial institutions, distributors of financial products, and enablers of financial services such as administrators or technology platforms.

In addition to sitting on the board of portfolio companies, LeapFrog also seeks active involvement below board level. "Because of our deep operational experience in financial services, we work closely with portfolio companies to create value in their businesses, including product design, distribution development and enhanced governance," Kuper explains.

Fund II is three times the size of its 2009 vintage predecessor and as a result the equity check range has increased from $5-20 million to $10-50 million. The first investment has already been completed: a $29 million commitment to Indian non-banking finance company (NBFC) IFMR Capital.

LeapFrog is open to a broad range of exit options, including IPOs, trade sales and selling back to the promoter. Its most recent exit from Fund I was the sale of Express Life - a high-growth provider of life insurance and savings products in Ghana - to Prudential in December 2013. The investment is said to have delivered an IRR of 82%.

LeapFrog estimates that Fund I portfolio companies have reached 22.7 million people across 16 countries. These companies focus on customers earning under $10 a day, whose collective spending power is forecast to rise to $5 trillion over the next $10 years.

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