LeapFrog invests $29M in Chennai-based NBFC IFMR Capital

Emerging markets impact investment firm LeapFrog Investments has invested $29 million (Rs 175 crore) in non-banking finance company (NBFC) IFMR Capital Finance Ltd.

The investment has been routed through its second fund LeapFrog Fund II. This is the first investment by LeapFrog from its second fund and third investment in India.

Commenting on the deal, Jim Roth, co-founder of LeapFrog Investments, said, “The demand for financial springboards and safety nets in India is growing fast, on a very large scale; IFMR Capital recognised this need early. In a short time, they have built a high road between the capital markets and the institutions and India’s emerging middle class; we look forward to working with them now to create a financial highway.”

Bindu Ananth, president of IFMR Trust, said, "IFMR Capital was created by us to enable risk transmission for high-quality originators operating in under-banked markets. The participation of LeapFrog significantly strengthens our ability to work with a much larger number of originators across asset classes in the coming years and make access to financial services a reality for millions of low-income households in India.”

Chennai-based IFMR Capital was founded in 2008 and offers structured finance products that enable risk transfer from originator institutions to diversified investors. Its capital market investors include banks, mutual funds, private wealth investors, NBFCs, development finance institutions and offshore funds.

It operates in over 345 districts across 24 states in India. These institutions deliver credit, insurance and other financial services to over 6.6 million active borrowers and 7.6 million insured customers.

Rothschild acted as financial advisor to IFMR Capital for the deal.

Last year, UK’s development finance institution CDC Group Plc had committed $25 million to LeapFrog Fund II, managed by LeapFrog Group Ltd, which specialises in backing companies that provide micro-insurance products and other financial services in developing countries. The new fund will make significant minority investments in portfolio companies, with the majority of deals in the $10-25 million range, but with the potential to provide up to $50 million.

LeapFrog’s first fund had previously raised $135 million and backed two Indian companies—Mahindra Insurance Brokers Ltd and Shriram Credit Company Ltd.

(Edited by Joby Puthuparampil Johnson)

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