LeapFrog Investments has beaten its fundraising target for its Emerging Consumer Fund IV focused on high-impact healthcare and financial services companies in global growth markets.
LeapFrog Investments has raised just under $1.02bn (€959m) for its Emerging Consumer Fund IV, beating its fundraising target of $1bn. This includes $808m of primary fund commitments and up to $210m of pre-allocated co-investment, which will be invested in high-impact healthcare and financial services companies in global growth markets in Africa and Asia.
Cornerstone investors in the fund include institutional investors Temasek, AIA, Prudential Financial, as well as the European Investment Bank and the U.S. International Development Finance Corporation.
The fund also received commitments from global asset managers such as Sumitomo Mitsui Trust Bank and Van Lanschot Kempen, healthcare investors Eli Lilly and Company, and foundations and endowments such as the Ford Foundation and the IMAS Foundation.
New investor interest
The company said the fund has also raised a significant amount of capital from new investors and broadened its investor base into new markets including Singapore, China, Japan, Austria, Norway, Oman and Turkey.
Originally, LeapFrog announced it planned to close the fund to investors in February this year. Daniel Stacey, head of external affairs for LeapFrog, told Impact Investor that the interest in the fund from a number of new institutional investors within markets where the company had never raised capital before, was the reason for the later than anticipated fund closure.
“A number of these new LPs took slightly longer to onboard and familiarise [themselves] with impact investing and so, we extended our final close to accommodate them, even while we were already deploying capital into five new portfolio companies through Fund IV,” he said. “We considered it important to bring these new LPs on board, to help seed and promote our profit with purpose proposition in new markets across the globe.”
In parallel, the company has entered into a partnership with Prudential Financial to invest in African financial services firm Alexander Forbes, raising around $135m and bringing new allocations to the firm’s healthcare and financial services strategies to over $1.15bn.
Healthcare and financial services
LeapFrog said that the fund would target 100 million emerging consumers and producers to “build better lives” and has already reached 24 million through five initial companies.
“Fund IV seeks to invest in companies across two sectors- healthcare and financial services – to deliver essential services and products for lower-income consumers in Asia and Africa,” said Stacey, explaining the company’s theories of change, which are specified for each investment, focused on the four core areas of scale, quality, affordability and governance.
Stacey said that in healthcare, the focus is on providing critical health services to underserved consumers such as primary healthcare, diagnostics, pharmaceuticals, and prevention and chronic illness management tools. In the area of financial services, LeapFrog invests into businesses in the insurance, pensions, finance and banking sectors. These provide solutions to underserved consumers, giving them the tools to directly mitigate financial shocks and reduce costs, he said.
Stacey explained that since owning stakes in the five businesses, they have collectively increased the number of emerging consumers they reached by 40%.
“[It is] something we push them hard to do so that we can ensure low-income families receive vital healthcare and financial tools,” said Stacey.
LeapFrog said that all five investees have also achieved strong revenue growth over the past year.
First five investments
The fund’s first investment was into Redcliffe Lifetech, for which it led a $61m funding round and which LeapFog said has rapidly grown into one of India’s largest and lowest cost health diagnostics businesses. The company has conducted over 20 million tests for Indian patients, using a decentralised network of 76 labs and over 1600 collection centres.
The fund has also invested $70m into Sun King, a large off-grid solar financier, which has provided 118 million people with access to solar energy to date, and $50m into insurtech company Bolttech, which offers tailored and low-cost insurance policies across 35 markets. It also led a funding round of $48m into Electronica Finance, which helps power MSME growth in India with loans for machines, equipment, rooftop solar among other things.
Most recently, the fund invested $30m into Auxilo Finserve, a higher-education lender in South Asia, which LeapFrog said had seen 75% compounded annual growth in its loan book across the last three years, as more of India’s more than 700 million people under the age of thirty sought training and education to enhance their skills and future earning potential.
Commenting on the most recent investment, Stacey said: “LeapFrog is dedicated to supporting springboards into prosperity across a range of sectors in India, from finance and insurance, to healthcare and clean technologies. With Auxilo, we see a unique opportunity to enable the best and brightest to pursue their dreams of higher education and training, irrelevant of their financial background.”
Impact measurement
LeapFrog’s head of impact, Julie Wallace previously told Impact Investor that the company sought to measure purpose as rigorously as profit, and would report on the fund’s financial and social performance quarterly.
Stacey said that the company would also continue to use its proprietary framework ‘FIIRM’ for the new fund to measure companies’ financial, impact, innovation and risk management progress.
“LeapFrog also adheres to and measures its performance against a number of impact frameworks, which also link to the SDGs, including GIIN’s IRIS+, the Operating Principles for Impact Management and the Impact Management Project’s 5 Dimensions of Impact,” he added.
