46735 - LeapFrog Emerging Consumer Fund IV, LP

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Summary of Investment Information

Project Number

46735

Company Name

LEAPFROG EMERGING CONSUMER FUND IV LP

Date SPI Disclosed

May 23, 2022

Country

World Region

Region

Global

Projected Board Date

Jun 23, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

May 28, 2023

Department

Disruptive Technologies and Funds

Industry

Funds

Previous Events

Approved : Jun 30, 2022
Signed : Jun 30, 2022
Invested : May 26, 2023

Sector

Growth Equity Fund

Project Description

IFC is considering an investment of up to US$50 million along with a US$50 million co-investment envelope, into LeapFrog Emerging Consumer Fund IV, L.P. (“Fund”), a US$1 billion fund making growth-stage investments in healthcare and financial services businesses in Africa, South Asia and Southeast Asia. The Fund is registered as a limited partnership and it holds a Global Business License (“GBL”) from the Financial Services Commission of the Republic of Mauritius.

The Fund will seek to take control-oriented significant minority or majority stakes in 18-20 opportunities with initial tickets typically in the range of between US$30 and US$70 million. The Fund will be investing solely in healthcare and financial services businesses

Associated Advisory Engagement

There are no advisory services associated with this engagement.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	100.0

Development Impact

LeapFrog is an experienced fund manager focusing on the financial and healthcare sector. Project level outcomes are delivered through increasing access to equity and value creation for mid-cap companies in Asia and Africa, including investees with an inclusive business model to serve underserved and bottom of pyramid customers; and increasing access to financial services for underserved private individuals and businesses including MSME customers across many emerging markets in Africa and Asia. The Fund Manager will support value creation in its investee companies through institutionalization, improved customer focus, and operational improvements including digitization leading to market expansion. Market creation is delivered by strengthening the competitiveness of Africa’s PE market. The project supports an experienced emerging market-focused fund manager to raise a US$1 billion follow-on fund in the mid-cap market segment with a meaningful allocation of approximately 40% to the African market. Beyond the Project, the success of the Fund will encourage global fund managers to raise new or follow-on funds in the African PE market. In turn, this is expected to attract international institutional investors and reduce the need for capital from Development Financial Institutions (“DFI”) for future fundraisings.

IFC’s additionality is both financial and non-financial. Financial additionality consists of IFC's provision of equity as a part of the first close and bringing in institutional capital to help the Fund Manager achieve its fundraising target. The financial additionality is further augmented by a co-investment envelope that would allow the Fund Manager to scale up the committed capital in its investee companies. Non-Financial additionality involves non-commercial risk mitigation, as IFC’s participation in the Fund’s first close alongside other institutional investors participating in the first close will give comfort to other institutional investors and DFIs looking to come in at subsequent closes.

E&S Category Rationale / Risks and Mitigation

The proposed project involves an equity investment in the Fund, a successor of LeapFrog Fund I and LeapFrog Fund III, which are existing IFC projects. The Fund is planning to invest in healthcare and financial services businesses in Africa, South Asia and South-East Asia. Financial services companies are expected to include life insurance & wealth management, banking & credit, and digital financial services. Healthcare companies are expected to include diagnostics, wellness & chronic care managers, retail pharmacies, single-specialty providers, manufacturing and distribution of medical devices, and digital health. The activities supported by the Fund are expected to have low to medium E&S risks and therefore this investment has been classified as category FI-2 project according to IFC's Sustainability Framework. The key E&S risks and impacts of this project derive from the Fund Manager's capacity to identify and manage potential environmental and social risks associated with its investment activities, including the supply chain of its investees. These risks typically include occupational health and safety issues, pollution prevention, waste and wastewater management, and labor and working conditions issues, and community impacts among others. The Fund will not support higher risk transactions that may include: (a) harmful or exploitative forms of forced labor, child labor or harmful child labor; (b) ozone depleting substances, PCB's (Polychlorinated Biphenyl's) and other specific hazardous pharmaceuticals, pesticides/herbicides or chemicals; (c) wildlife or products regulated under the Convention on International Trade in Endangered Species or Wild Fauna and Flora (CITES); (d) unsustainable fishing methods; (e) the production or trade of illegal narcotics and/or drugs (f) involuntary resettlement; (g) potential adverse impacts on Indigenous Peoples; (h) significant risks to or significant negative impacts on the environment, community health and safety, biodiversity, cultural heritage; or (i) significant occupational health and safety risks. In addition, transactions involving coal-related activities will be excluded from the project portfolio. The E&S requirements for this project will be the Exclusion List as well as the host country laws and regulations and the IFC's Performance Standards. As part of this project, the Fund will be required to maintain and to continue implementation of its ESMS and to provide regular updates of its investment portfolio. IFC will review the first three E&S due diligence reports to confirm the capacity of the Fund Manager in implementing its ESMS and assessing the E&S risk of its investees. The Fund will also be required to provide Annual Environmental Performance Report to IFC.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Auxilo	India	O-CB- Finance Companies - Consumer Finance
Bolttech	World Region	O-JC- Composite Insurance (Life and Non-life)
Electronica	India	O-CA- Finance Companies
Redcliffe Lifescience	India	S-AC- Other Health Services
Sun King Global	Kenya	V-EA- Distribution Business

The Fund Manager has developed an E&S management system in line with IFC's requirements and its E&S performance is considered satisfactory. LeapFrog has developed an Environmental and Social Management System (ESMS) that includes an in-house integrated framework to assess and monitor ESG issues. It consists of a defined set of KPIs to measure Financial performance (F), Impact (I), Innovation (I) and best practice Risk Management (RM). FIIRM is also a tool used by deal teams to assess company risk pre-investment, including the critical elements of client protection, good governance and policy, and enterprise risk management. LeapFrog collects FIIRM data to monitor performance and ESG issues on both a quarterly and annual basis. Meeting relevant environmental, health and safety regulations as well as the Performance Standards, is a part of the due diligence process for all Fund investments. The Fund Manager also developed a Responsible Investment Code (RIC) that specifically addresses incorporation of E&S principles, policies, and procedures into the Fund's ongoing operations. The RIC is updated and signed off separately for each Fund. At the due diligence stage, LeapFrog reviews a target company's environmental and social policies, labor relations, employee review processes, community and stakeholder relations, its management of third-party workers and the company's systems in depth, in order to assess the environmental, health and safety and community risk and impact of the company's operations. LeapFrog also examines potential investees' risk management framework. Corrective actions are introduced if LeapFrog finds the company's existing guidelines, processes and compliance are not sufficient, but could be brought up to standard quickly as part of the 100-day plan for the business. The Fund Manager will require investee companies to appoint an officer with responsibility for ESG matters. The Fund Manager's ESMS implementation is overseen by a team of dedicated members of the senior LeapFrog team. ESG, Impact and Compliance training is conducted for all new LeapFrog joiners. Investment teams are trained by the Impact Team on the job during the process of evaluating investments. Impact, ESG and Reputational Toolkits are available for deal teams to use and identify and assess material ESG risks.

Contacts

For Inquiries About the Project, Contact

LeapFrog Investments
Greg Jones
Head of Investor Relations

investorrelations@leapfroginvest.com
C/o AXIS Fiduciary Ltd, 2nd Floor, The AXIS, 26 Bank Street Cybercity, Ebene 72201, Mauritius
www.leapfroginvest.com

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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