LeapFrog, Temasek and EIB put US$500 million into tackling climate change in Africa, emerging Asia

LEAPFROG Investments has joined forces with Temasek and the European Investment Bank (EIB) to invest US$500 million in companies that provide green solutions in Africa and emerging Asia.

The pledged investment under LeapFrog’s new climate-investment strategy will focus on the tools and technologies that tackle climate challenges for consumers in the developing countries of the two regions.

Rooftop solar infrastructure, efficient cook tops, two- to three-wheeler electric vehicles and smart-farming methods have been identified as the four areas ready for huge capital injections.

The sustainability-focused investment group said on Thursday (Nov 30): “Targeting the energy, mobility, built environment and agricultural sectors, and providing growth equity and distinctive expertise to fast-scaling consumer companies, LeapFrog’s investments will support low-carbon and resilient growth as incomes rise in countries such as India, Indonesia and Kenya.”

The asset manager noted that South Asia, South-east Asia, and Africa today contribute to 25 per cent of global climate emissions, but this could rise to as much as 73 per cent by 2050 without urgent action.

A report titled “Investor Roadmap for Inclusive Green Growth”, put together by LeapFrog, Temasek and World Bank think tank, the Consultative Group to Assist the Poor (or CGAP),  was released on Thursday. It revealed a US$330 billion-per-year opportunity in emerging markets’ green investments.

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LeapFrog said its climate team has built a pipeline of green businesses in the targeted regions to accelerate the green transition there. The initial investments will be unveiled in 2024.

It is not new to doing this. Leapfrog’s previous funds have backed successful climate companies such as Sun King, the largest pay-as-you-go solar financier in Africa.

The impact investor also noted that the lower prices in green tech across emerging markets is spurring investors to make big bets on tipping-point technologies. These include the US$5.4 billion valuation for Ola Electric, which runs the world’s largest two-wheeler electric-vehicle factory.

In 2021, Temasek committed US$500 million to LeapFrog to anchor its future investing activity; the sum included a US$100 million commitment to the climate investing strategy.

The support from EIB is being appraised. If it goes through, it would be the fifth investment from the lending arm of the European Union with LeapFrog.

The founder and chief executive officer of LeapFrog, Andy Kuper, highlighted the increasing opportunities in facilitating green transitions in emerging economies: “Climate has no borders, and so neither should global capital markets, as we work to rapidly scale clean, efficient, affordable climate solutions for the five billion people in the emerging markets of South Asia, Southeast Asia and Africa.”

Benoit Valentin, head of impact investing in Temasek, said: “There is huge potential for emerging markets to leapfrog a generation of traditional and incumbent technology with access to clean technology, while improving lives and livelihoods.

“We need to take urgent action, tap the significant green discount, and seize investible opportunities for a greener and more inclusive future.”