Financial services-focused impact investor LeapFrog raises $400M in second fund

Emerging markets impact investor LeapFrog Investments has raised $400 million for its second fund to invest in firms which are looking to tap on to the demand for financial services from 2 billion emerging consumers in Africa and Asia.

Investors in the oversubscribed final raise include AIG, Alliance Trust PLC, AXA, HESTA, RGA Reinsurance and Zurich Insurance Group. The fund is now backed by six global insurers, three globally renowned re-insurers, as well as global asset managers, pension funds and development financiers.

The new fund will invest in high-growth companies providing insurance, saving, pensions and payments in some of the fastest growing markets globally.

“There is a growing realisation among global financial institutions that the emerging consumer represents an historic opportunity,” says Andrew Kuper, founder and CEO of LeapFrog. “People across Africa and Asia are working to achieve security for their families and businesses, but most have yet to reach the middle class. There is an immense demand for transformative financial tools,” he said.

It had made first close of the fund at $204 million a year ago, around eight months after launching the fundraising process in early 2013.

Insurance groups that invested in the initial raise include MetLife Inc., Prudential (the US), XL Group, Achmea, PartnerRe and Swiss Re. Global banks and asset managers that committed money include JPMorgan Chase & Co, Christian Super and TIAA-CREF. The fund also got the backing from five of the world's leading development finance institutions: CDC Group Plc, DEG (European investment bank), FMO (Dutch development bank) and Oikocredit.

The firm's portfolio companies focus on customers earning under $10 a day, whose collective spending power is forecast to rise to $5 trillion within the coming decade. LeapFrog is a global dedicated equity investor in emerging markets financial services, with partner companies serving 22.7 million people across 16 countries.

In March, LeapFrog invested $29 million (Rs 175 crore) in non-banking finance company IFMR Capital Finance Ltd. The firm's first fund had previously raised $135 million and backed Mahindra Insurance Brokers Ltd and Shriram Credit Company Ltd.

(Edited by Joby Puthuparampil Johnson)

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