UK’s development finance institution CDC Group Plc has committed $25 million for a new fund bringing financial services to the poor in Africa and Asia regions.
The money is committed 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.
CDC’s commitment of $25 million has helped the fund raise $204 million, from a range of commercial and development finance investors. The fund is targeting a total size of $400 million. (SEE: LeapFrog makes first close of its second fund at $204M).
CDC is expecting the fund to help finance low-income and financially excluded consumers in Africa and South Asia.
LeapFrog Fund II will use the capital to invest in companies that offer insurance, savings, pensions and other investment products to millions of consumers, the majority of who live on less than $10 a day.
To date, the companies in which LeapFrog has invested have provided financial services to over 18 million people across 13 countries, said the company. With its new fund, LeapFrog now aims to reach as many as 50 million customers. The fund’s investment estimates to support at least 50,000 jobs in LeapFrog’s portfolio companies and supply chain.
Access to insurance in developing countries is limited but growing, with Lloyds estimating that only 5 per cent of people in developing countries have insurance. Across the African continent, over 60 per cent of the population live in countries where the insurance industry for ordinary consumers is either entirely absent or reaches less than 1 per cent of the population, said CDC.
LeapFrog’s first fund, which raised $135 million, includes partnering with companies such as Mahindra Insurance Brokers Ltd and Shriram Credit Company Ltd. 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.
(Edited by Joby Puthuparampil Johnson)