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LeapFrog Investments has been in the market since 2022 with its fourth fund, targeting a cool $1 billion. It closed the fund about $200 million shy of its target, a reflection of what LeapFrog CEO Andy Kuper called “one of the most challenging fundraising cycles for private equity this century.” That’s saying something: LeapFrog launched and raised its first fund at the height of the financial crisis.
The fourth fund is LeapFrog’s largest, with more than half of the capital mobilized from investors in Asia, the firm’s key investment region. First-time investors came from Japan, Singapore and China, as well as Austria, Norway, Oman and Turkiye.
LeapFrog has also secured $210 million in pre-allocated co-investment capital from International Finance Corp. and others. It also is teaming up with Prudential Financial on an investment in South African insurance and pension provider Alexander Forbes, bringing Fund IV’s total of committed and mobilized capital to just under $1.2 billion.
Temasek stake
LeapFrog’s fourth fund invests in financial services and healthcare companies serving the rising consumer class in Asia and Africa’s growth markets. Investors in Asia responded to the opportunity, starting with a landmark $500 million partnership with Singaporean sovereign wealth fund Temasek in 2021.
Temasek took an equity stake in LeapFrog and pledged capital for the firm’s future funds as part of Temasek’s impact strategy under director Eliza Foo.
Among the other Asia-based institutional investors in Fund IV are Chinese insurance group AIA and Japan’s Sumitomo Mitsui Trust Bank.
First investments
LeapFrog has made five investments from Fund IV, including Kenyan off-grid solar provider SunKing and Singaporean insurance provider Bolttech. In India, it has invested in the diagnostic services company Redcliffe Labs, small business lender Electronica Finance and higher-education lender Auxilo Finserve. Other investors in LeapFrog’s fund include Dutch bank Van Lanschot Kempen, the European Investment Bank, the US International Development Finance Corp., and the Ford and IMAS foundations.
Climate strategy
Separately, LeapFrog is raising a climate fund. It notched its first climate deal earlier this year: an investment in India-based Battery Swap, which operates a network of battery swapping stations for two- and three-wheel EVs.
“The emerging consumers that we have been serving for over 18 years in financial services, followed by health care, are also the same consumers that are going to be impacted significantly and disproportionately by the climate transition that we are all experiencing,” LeapFrog’s Nakul Zaveri told ImpactAlpha (watch his video interview).
The firm estimates that in some markets, low-carbon technologies like small EVs, rooftop solar and even climate-smart farming tech have “now hit a price inflection point where they offer a ‘green discount’ of up to 30-40% less than incumbent carbon intensive alternatives.”
