Temasek in US$500m partnership with global impact investor Leapfrog

Michelle Quah
Published Tue, Mar 9, 2021 · 01:05 PM

STATE investor Temasek announced on Tuesday that it has entered into a US$500 million strategic partnership with global impact investment group LeapFrog Investments, building upon its presence in the impact investing space.

Temasek said the strategic partnership will take the form of a multi-fund investment by the state investor "to anchor LeapFrog's future funds". It will take a minority stake in LeapFrog and provide growth capital to support the expansion of the LeapFrog team and investment capabilities across Asia and Africa.

LeapFrog and its investment process will continue to be managed and controlled by its team of partners, with Temasek taking one non-executive seat on LeapFrog's management board.

Explaining its decision, Benoit Valentin, Temasek's head of Impact Investing, said: "There is an urgent and pressing need to address the critical social and environmental challenges that the world is facing. We believe in the potential of impact investing to unlock the capital to meet these challenges.

"Our partnership with LeapFrog, with its focus on serving underserved markets, underscores Temasek's commitment to investing for impact, and the contributions these investments make towards shaping a better world for our communities."

Impact investing has been defined as investing that is made with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return, and such investments tend to provide capital to address social and/or environmental issues.

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Temasek has been growing its presence in impact investing in recent times. It said that, in May 2019, ABC World Asia was established by Temasek Trust; it was then followed by the closing of Emerald Global Water Impact Fund in September 2020, with committed capital totalling US$100 million from Temasek and other investors.

As for LeapFrog, it was founded in 2007, and invests in "exceptional businesses in Africa and Asia, partnering with their leaders to achieve leaps of growth, profitability and impact". LeapFrog said its companies - which now reach 212 million people across 35 countries with healthcare or financial services - have grown 30 per cent annually, on average, from the time of investment.

Andy Kuper, Leapfrog's founder and chief executive officer, said: "When we launched LeapFrog, the impact industry did not exist, but we believed that (our strategy of) Profit with Purpose was the future of business and investment. For almost 15 years, we have worked to build a values-driven firm, co-creating a thriving industry that now stands at US$715 billion and is projected to grow to up to US$26 trillion.

"Through this landmark commitment, Temasek joins in our vision to build an enduring and exemplary investment institution. We will continue to open the gates of the capital markets to purpose-driven businesses."

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