> Posted by Center Staff

A new private equity fund to back financial services providers targeting low-income clients in Africa, and South and Southeast Asia raised $204 million in its initial investment round and aims to amass another $200 million in the coming months. Managed by LeapFrog Investments, an emerging markets fund manager, the fund will invest in companies offering financial services such as general insurance, life insurance, savings, pensions, and investments products to low-income clients.

This is the second fund from LeapFrog. Its first, sized at $135 million, has a portfolio of seven investee companies whose financial products have reached over 18 million people across 13 countries. Many investors from the first fund have also contributed to this second venture. Investors of this initial investment round spanned major insurance groups, global banks, asset managers, and development finance institutions, including MetLife Inc., Prudential, Swiss Re, JPMorgan Chase & Co., CDC, and Oikocredit.

The demonstrated appeal of the new fund represents the enormous opportunity for the expansion of financial services in these emerging markets. “There are 1.9 billion emerging consumers in LeapFrog’s target regions, and their spending power is forecast to rise from $2 trillion today to $5 trillion in the coming decade,” LeapFrog’s President and Founder Dr. Andrew Kuper said of the fund.

Eight country markets are targeted in the new initiative: Indonesia, Philippines, India, Sri Lanka, Kenya, South Africa, Nigeria, and Ghana. In 2012, the annual financial services growth across these regions averaged 17.4 percent, more than four times the year’s nominal global GDP growth.

For more on the new fund, click here. For more on the implications for financial inclusion of rising incomes at the base of the pyramid, check out our second FI2020 Mapping the Invisible Market paper, Growing Income, Growing Inclusion.

Image credit: thriol

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