Emerging markets impact investment firm LeapFrog Investments has announced the first close of its second fund at $204 million. The fund will invest in companies in Africa, South Asia and Southeast Asia that provide financial services such as insurance, savings, pension and investment products to emerging consumers.
Several of the world's largest insurers, reinsurers, banks and asset managers have invested in the first round, said the company.
"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 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 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," he said.
The capital was raised in just eight months with many participants being repeat investors from LeapFrog's first fund, a $135 million vehicle, with some investors doubling or tripling their allocation.
Insurance groups that have invested in the initial raise include MetLife Inc., Prudential (the US), 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 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 emerging consumer represents a striking growth opportunity," said Lata Reddy, vice president at Prudential Financial.
"We are focused on approaches that leverage global finance and our capabilities to address long-standing economic challenges around the world," said Peter Scher, executive vice-president, JPMorgan Chase & Co.
LeapFrog's investment in India includes partnering with brands such as Mahindra Insurance Brokers Ltd and Shriram Credit Company Ltd.
It estimates that financial services growth in these markets in 2012 was on average 17.4 per cent, over four times the nominal global GDP growth, representing a sustained bright spot for emerging markets.
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