LeapFrog’s new fund to double down on financial and healthcare sectors in Africa and Asia

LeapFrog Investments, a private equity firm that is keen on the financial and healthcare sectors, plans to raise $1 billion for a new fund targeting businesses in “global growth markets,” including Africa.

The Emerging Consumer Fund IV is set to hold a final close in February next year having already secured the backing of several institutional investors, including the European Investment Bank (EIB) and World Bank’s IFC, which have committed $60 million and $50 million, respectively.

Other Fund IV limited partners (LPs) include U.S.-based financial services company Prudential Financials and Hong Kong-based insurer AIA Group, which have made multi-fund investments of $500 million and $200 million, respectively. Singapore-based investment firm Temasek in 2021 committed $500 million to the firm’s funds including the current one.

LeapFrog said it will make initial investments of between $30 million and $70 million in 18 to 20 high-growth businesses. It will target healthcare and financial services businesses in Africa, where it will allocate about 40% of the funding according to disclosures by the IFC. It is also eyeing investments in South Asia and Southeast Asia.

Leapfrog’s global head of external affairs Daniel Stacey told TechCrunch: “The Fund will seek to take control-oriented significant minority or majority stakes in 18-20 opportunities. An investment by LeapFrog is a commitment to true partnership. We actively employ our knowledge and experience, along with our capital, to support the leadership teams and boards of the businesses we back, including through follow-on funding. We help leaders and owners to meet their ambitious growth, profitability and impact targets.”

The PE firm began deploying the fund IV last year and has so far invested in Sun King, one of the largest off-grid solar energy companies in Africa, which raised $330 million series D last year. Sun King offers pay-as-you-go solutions for systems that power lights, mobile phones and home appliances like TVs. Fund IV has also invested in India’s mobile diagnostics chain, Redcliffe Labs, and insurtech unicorn bolttech.

In Africa, LeapFrog’s other portfolio companies include South African fintech Jumo, Nigerian payments company Interswitch, Kenyan chain drugstore Goodlife pharmacy and Pyramid Group, a cardiac and orthopedic equipment distributor.

The financial services companies targeted by the firm include those in life insurance and wealth management, banking and credit, or those offering digital financial services. In the healthcare sector, LeapFrog is keen on diagnostics, wellness and chronic care managers, retail pharmacies, single-specialty providers, manufacturing and distribution of medical devices and digital health, according to the disclosures.

Stacey says the PE firm has over the last 15 years focused on impact investing to help low-income consumers build better lives, with an initial focus on financial inclusion, before including healthcare six years ago. He added that the firm sees growing opportunities in these sectors.

“The incredible penetration of smartphones across low-income populations, combined with falling data prices, has helped to slash costs and accelerate growth across digital financial services in our key markets. Likewise, the healthcare story has gained urgency in recent years across the developing world, as an epidemic of lifestyle related diseases leads to revolutions in consumer healthcare and preventative medicine, all accelerated by improvements in digital distribution and AI-backed treatment models,” he said.

“These are trillion-dollar opportunities, and we see the runway for growth extending across many decades.”