Emerging markets impact investment firm LeapFrog Investments Ltd has received a commitment of $25 million (Rs 161 crore) from International Finance Corporation, the World Bank’s private-sector investment arm, for its third fund.
The fund, LeapFrog Emerging Consumer Fund III, is a 10-year closed-end private equity fund that aims to raise as much as $800 million. The fund would seek to raise third-party commitments to make mid-market growth capital investments in financial services and healthcare companies that target Africa, South Asia and Southeast Asia, IFC said in a statement.
The fund will make equity and quasi-equity investments averaging $25-30 million, with one-third of the fund focused on the healthcare segment and two-thirds on financial services investments.
LeapFrog’s portfolio investments have reached over 91 million people, of which over 74 million are low-income. The firm has made 18 investments with operations in 21 countries.
The LeapFrop team is based in South Africa, Singapore and the UK. Its founder and CEO, Andrew Kuper, was one of the pioneers of the ‘profit with purpose’ business model and was the managing director of Ashoka, a global organisation that invests in social entrepreneurs, where he led business partnerships, investment and strategy development.
The third fund’s top priority countries include Kenya, Nigeria, Ghana, South Africa, India, Indonesia, the Philippines and Sri Lanka. It also plans to invest in several other countries in its target regions.
The PE firm’s investors include insurance groups AIG and AXA, the UK’s CDC, Dutch development institution FMO, MetLife and Prudential Financial Inc., among others. Prudential Financial recently announced a $350 million partnership with LeapFrog to invest in life insurers in Africa.
IFC has an active direct PE-style investment practice in India, and also lends to companies in the country. Besides, it has an active LP, or limited partner, portfolio in India where it backs PE and VC funds focused on India.
LeapFrog’s bets
The PE firm’s second fund raised $400 million. Its first fund mobilised $135 million.
It launched the third fund in 2015. The same year, Overseas Private Investment Corporation of the US committed to invest up to $200 million in the fund.
LeapFrog has invested in a number of finance companies in India, including the Mumbai-listed Magma Fincorp Ltd, Mahindra Insurance Brokers Ltd and Shriram Credit Company Ltd.
Last month, LeapFrog co-invested with several investors to pick up a stake in Fincare Business Services Pvt. Ltd as its flagship firm, Disha Microfin Pvt. Ltd, looks to start small finance banking operations in the first half of this year.
It made a partial exit when Chennai-based non-banking financial company IFMR Capital closed a second round of institutional funding from Eight Roads Ventures in November last year. The fund fully exited IFMR Capital when Standard Chartered Private Equity infused another $50 million .
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