Temasek, the Singaporean based investment company, has committed to a $US500 million allocation to Leapfrog in a deal that ranks as the largest ever commitment to an impact investor globally.
The agreement is more than one deal, it’s a long-term partnership, which will see Temasek act as cornerstone investor for future fund raises. Leapfrog’s been an impact investing pioneer ever since the private equity firm was founded some 13 years ago, and the deal cements that reputation. It’s now raised a total of more than $2 billion since 2007.
Leapfrog’s investment focus is across healthcare and financial services in fast-growing economies. Their portfolio of companies employ more than 130,000 people and touch more than 200 million emerging consumers. The mission is to reach 1 billion people by 2030.
While the firm is managed from offices in London and Singapore, the founder and CEO, Andy Kuper, is based in Sydney. He explained that the deal is a step forward for the industry as much as his company.
“Well, I think it reflects a new level of scale for the global impact investing industry, which we’ve been trying to pioneer since 2007. Temasek is known for the quality of their commercial acumen, and their scale as a multi $100 billion institution. They’re often referred to as the smartest people in the room, and what they’ve done here is make a major commitment to several of our funds, that we will roll out in the next five years, all focused on our specialist strategies of financial inclusion and healthcare.” Andy explained.
The mandate won’t try to influence Leapfrog’s impact approach, instead focussing on an enduring partnership, and sustainable impact and returns.
“I think they were particularly excited about our approach to wealth and health. Essentially, there is an enormous opportunity to help low income people access, quality health care, and quality financial tools, often for the first time. In the past decade, we’ve enabled our companies to reach some 212 million people, of whom 168 million are low income.”
Deals like this aren’t done overnight, and Andy explained that having advisors like David Gonski (previous Chairman of the Future Fund and ANZ) and Simon Israel (ex-Singtel) were pivotal to both identifying the opportunity, and making the appropriate connections to bring it to fruition.
“We’ve been working for over a decade to create a unique combination at Leapfrog, of authenticity and depth of impact, scale and institutional quality as a private equity firm, and returns for investors. And when I met with the chief executive of Temasek, they were looking for this same authenticity, institutional quality and financial acumen. And they were looking, of course, to invest into this incredibly important theme of impact.” Andy says.
The size of the commitment will enable Leapfrog to compound and multiply their unique brand of ‘profit for purpose’ investing, but it also signals a newfound willingness of institutional investors to commit large sums to impact.
Investors across the Australian impact ecosystem speak of the need to tap the immense stores of capital held by superannuation funds. But the common rebuke from the big funds is that they want big deals, and previously the deal-flow was lacking.
This commitment sets a new precedent, one that has the potential to be the catalyst for further impact led investments across a broad swathe of industries and asset classes.
The full audio of the conversation between Andy Kuper and John Treadgold can be found on the Good Future podcast, listen HERE.