LeapFrog raises $700m for third impact fund
LeapFrog Investments has raised $700 million for its third fund with a view to investing in healthcare and financial services companies in emerging Asia and Africa. It initially targeted a corpus of $600 million.
It is being touted as the largest-ever private equity fund raised by a dedicated impact fund manager. AVCJ understands that LeapFrog is in the process of bringing in one final investor for which the firm has extended the fundraise until the end of May. However, no other new investors will be accepted. LeapFrog’s previous vehicle raised $400 million in 2014 with a similar mandate, while its debut fund raised $135 million in 2010.
“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,” Andrew Kuper, founder and CEO of LeapFrog, said in a statement. “It is a decisive demonstration that meeting the real needs of underserved people is great business.”
LPs include insurers Admiral, AIG, AXA XL, Everest Re, Hannover Re, Prudential Financial, QBE and Zurich Insurance, as well as development finance institutions DEG, Proparco, the International Finance Corporation, and the US’ Overseas Private Investment Corporation, which contributed $200 million. Other investors include the Ford Foundation, the Rockefeller Foundation, Ascension Capital, Partners Group Impact, and Australian pensions Christian Super and HESTA.
Fund III will make investments in a range of $25-30 million per deal with one-third of the fund targeting healthcare, and two-thirds allocated to financial services. Core geographies include South and Southeast Asia and sub-Saharan Africa. The fund aims to impact 70 million consumers with limited access to quality insurance, savings, pensions, credit, remittances, medicines or healthcare services. It has made five investments to date, including two in Asia.
Last year, Fund III led a $47 million round for NeoGrowth Credit, a financial technology company that provides small Indian retailers with flexible loans that can be repaid by credit card receivables, e-commerce sales or other non-cash payments. The deal targets an inflexion point in the rise of digital financial services in India. Meanwhile, the fund has acquired a majority stake in Ascent Meditech, an Indian supplier of household orthopedics and wound-care goods.
“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,” said Ross Piper, CEO, Christian Super. “Leapfrog, and others like them, demonstrate on a daily basis that genuine impact and strong financial returns can go hand in hand.”
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