Millions to benefit from record-breaking impact investment fund
22 May 2019 at 5:38 pm
Impact investment advocates hope an international billion dollar emerging markets fund that’s expected to help 70 million low-income people will inspire similar action in the Australian market.
London-based firm LeapFrog Investments announced it had surged past its US$600 million (A$872 million) target to reach $700 million (A$1 billion) by the fund’s closure, making it the “largest-ever private equity fund” by a dedicated impact fund manager.
The new fund will invest in healthcare and financial services companies, tapping into the demand from millions of emerging consumers – defined by The World Bank as living on under $10 a day – in Asia and Africa.
Investors include many of the world’s leading insurers (AIG, Prudential Financial, QBE), pensions and asset managers (Christian Super, Pinebridge, HESTA), development finance institutions (DEG, IFC, Proparco) and foundations (Ford Foundation and the Rockefeller Foundation).
Dr. Andrew Kuper, founder and CEO of LeapFrog Investments, said it was time for a “better kind of capitalism”.
“[This] announcement marks an unprecedented level of commitment to independent impact investment managers, with a new fund backed by diverse best-in-class institutional investors,” Kuper said.
“It also marks an important moment for responsible private equity.
“As our third fund and largest fund, it is a decisive demonstration that meeting the real needs of under-served people is great business.”
Philippe Le Houérou, CEO of IFC – the private sector arm of the World Bank Group and a lead investor in the new fund – said he was thrilled by the fund’s potential.
“We want to substantially increase impact investing for a sustainable world – so we are delighted to be supporting the largest equity fund by a dedicated impact manager in emerging markets,” Le Houérou said.
“By investing in this fund, IFC is expanding our long-standing partnership with LeapFrog and together we will drive this investment toward financial inclusion and health access.
“We want more and more investors who are looking to do well while also doing good.”
The fund has already made investments in five businesses, including digital remittances provider WorldRemit, the Goodlife Pharmacy chain in East Africa and NeoGrowth, which provides unsecured-credit products to micro, small and medium enterprises across India.
These businesses were chosen for their ability to reach millions of customers not well-served by conventional companies.
Sally McCutchan, CEO and executive director of Impact Investing Australia, told Pro Bono News she hoped this fund would inspire similar action from the Australian impact investment market.
“We need initiatives that can scale impact and investment at scale. It is terrific to see Leapfrog able to make this next leap in its capacity to direct capital to where there is significant need and opportunity to improve outcomes for people,” McCutchan said.
“It is an important illustration of what we can do from Australia and with communities across the Asia Pacific.
“We are seeing more initiatives around the world and see real potential in the Australian market to develop funds that can drive impact if we can address some key barriers to entry in the current market.”
McCutchan said other countries were moving to initiatives that could more readily drive investments at scale, through policy related to infrastructure and services designed to deliver better outcomes.
This includes the Canadian government’s CA$750 million (A$790 million) commitment to a social finance fund that Australia was yet to match.
“It would be of real benefit to Australian families and communities to see that kind of investment in the future here and create concrete opportunities to maintain the interest of both local and global investors… for impact capital and scalable solutions,” she said.