Global impact fund manager LeapFrog Investments saw a record year of deployment in 2020 and expects this year to be another bumper season amid growing investor interest in impact investing.
LeapFrog invests growth equity in digital financial services and healthcare companies across Asia and Africa.
LeapFrog’s partner in Singapore Fernanda Lima told DealStreetAsia in an interview that while the COVID-19 pandemic has accelerated trends conducive to investments in digital businesses, it has also exacerbated the economic hardships of many people.
“What we see is that there are more emerging consumers for us to serve,” Lima said.
LeapFrog recently reported a 22% rise in the value of its portfolios in 2020, as companies in its portfolio recorded average revenue growth of 26% over the year before.
As a measure of impact, insurance companies in LeapFrog’s portfolio paid claims totalling $629 million, 37% more than the year before. Remittances grew 55%, to a record value of more than $6 billion, or an average of $500 million a month that was being sent.
At the same time, the number of healthcare services – from medication to medical equipment, consults and diagnostics – that portfolio companies provided more than doubled to 21,700.
LeapFrog’s portfolio companies include Indian microfinance platform Fincare, and Indonesian insurtech startup Pasarpolis.
LeapFrog, which started in 2007, has raised more than $2 billion across four private equity funds from institutional investors. Earlier this year it secured $500 million from Singapore state investor Temasek, which will become an anchor investor in its funds.
The market for impact investments grew to $715 billion in 2019, from $502 billion a year earlier, according to the Global Impact Investing Network.
The sector, which raised more than $76 billion across more than 90 funds globally in 2019, has also drawn in global buyout firms. KKR, which closed a $1.3-billion global impact fund last year, is said to be in the market to raise a second fund. Rivals TPG and Bain Capital have each raised two funds, totalling more than $4 billion, and nearly $1.2 billion, respectively.
Still, there is room for more funds and managers to come on, Lima said.
“The problem is so big, right? We’re talking about 4 billion people in our markets, of which 2 billion don’t have access to healthcare. So, the opportunities are huge too.”
Edited excerpts of the interview with Lima: