LeapFrog Investments raises over Kshs17Billion for emerging consumer fund, as insurers and asset managers tap new source of growth and profits

·         LeapFrog Fund II will focus on eight markets in Africa and Asia, including Nigeria, Kenya, Ghana, South Africa, India, Indonesia, Sri Lanka and the Philippines.

·          LeapFrog has already invested US$13m in East African insurance group Apollo IL, and is actively seeking further investments in Kenyan companies

·         Investors include major insurance groups - Swiss Re, PartnerRe, MetLife Inc., Prudential, XL Group and Achmea - and global banks and asset managers such as JPMorgan Chase & Co. and TIAA-CREF

LeapFrog Investments, the emerging markets fund manager, today announced the initial raise of US$204 million (Kshs17.5B) for its second fund. The fund will invest in companies in Africa, South Asia and Southeast Asia that provide financial services such as insurance, savings, pensions and investment products to emerging consumers. Several of the world’s largest insurers, reinsurers, banks and asset managers have invested in the first round.

“The entry of these leading financial institutions indicates the increasing attractiveness of the emerging consumer segment – the millions of people eager to join the middle class but who are not there yet,” said Dr. Andrew Kuper, LeapFrog Investments’ President and Founder. “There are 1.9 billion emerging consumers in LeapFrog’s target regions, and their spending power is forecast by McKinsey & Co to rise from $2 trillion today to $5 trillion in the coming decade. Financial services are crucial springboards for households and businesses, but access is very limited. LeapFrog backs the best companies to serve this vast and untapped market.”

Doug Lacey, who leads LeapFrog's work in East Africa, said "Kenya is showing the way in innovative financial services solutions for the emerging consumer, and we anticipate making significant further investments in leading local companies."

Insurance groups that have invested in the initial raise include MetLife Inc., Prudential, XL Group, Achmea, PartnerRe and Swiss Re. Global banks and asset managers that have committed include JPMorgan Chase & Co., Christian Super and TIAA-CREF. The fund also obtained backing from five of the world’s leading development finance institutions: CDC, DEG, European Investment Bank, FMO, and Oikocredit.

The capital was raised in just eight months. Many participants are repeat investors from LeapFrog’s first fund, a US$135m vehicle, with some now doubling or tripling their allocation.

To date, LeapFrog’s portfolio companies have reached over 18 million people across 13 countries with financial products. LeapFrog’s track record includes partnering with major brands such as Apollo IL in Kenya, Mahindra IBL and Shriram CCL in India, and ARM in Nigeria.

The new fund aims to make equity investments of up to US$60m, and will continue to focus on LeapFrog’s priority markets of Kenya, South Africa, Nigeria, Ghana, Indonesia, the Philippines, India and Sri Lanka. Financial services growth in these markets in 2012 was on average 17.4%, over four times nominal global GDP growth, representing a sustained bright spot for emerging markets.

LeapFrog Investments will continue to be guided by a business philosophy of profit-with-purpose, combining strong financial returns with robust social impact. “Crucially, 12 million of the 18 million consumers our companies have reached so far are emerging consumers, living on less than US$10 per day,” said Kuper. “We are demonstrating that smart businesses that provide empowering products to emerging consumers actually grow faster and more profitably than their peers.”