LeapFrog Investments has made a $29 million investment into India’s IFMR Capital. The deal is the first to be made from LeapFrog’s Fund II.
LeapFrog Investments, the specialist investor in financial services in growth markets Africa and Asia, has announced a U.S $29m investment into India’s IFMR Capital. The deal is the first to be made from LeapFrog’s Fund II.
Acting as a bridge between capital markets and high quality financial institutions that reach under-served households and businesses, IFMR Capital operates in over 345 districts across 24 states in India. Today, these institutions deliver credit, insurance and other financial services to over 6.6 million active borrowers and 7.6 million insured customers.
Besides the capital, LeapFrog Investments brings on-board their operational expertise and knowledge of best practices across international markets. A key focus of the partnership will be to leverage IFMR Capital’s structuring expertise, reach and relationships across financial products and sectors in India.
Commenting on the deal, Dr. Jim Roth, Co-Founder of LeapFrog Investments, said, “IFMR Capital is led by an impressive leadership team that aligns exceptional business acumen with a strong sense of social purpose. The demand for financial springboards and safety nets in India is growing fast, on a very large scale; IFMR Capital recognized this need early. In a short time, they have built a high road between the capital markets and the institutions and India’s emerging middle class; we look forward to working with them now to create a financial highway.”
CEO of IFMR Capital, Dr. Kshama Fernandes, said, “There is a strong shared sense of purpose between LeapFrog Investments and IFMR Capital about our approach towards sustainably promoting financial inclusion. We believe we will be able to leverage our common strengths towards this goal and are delighted to have them as our partner. Their investment and their international team’s distinctive expertise will help enhance our capacity and our ability to provide valuable product and service offerings to our clients. It will also deepen our access to a wider class of international investors.”
Bindu Ananth, President of IFMR Trust said, “This investment is an important milestone for us. IFMR Capital was created by us to enable risk transmission for high-quality originators operating in under-banked markets. The participation of LeapFrog significantly strengthens our ability to work with a much larger number of originators across asset classes in the coming years and make access to financial services a reality for millions of low-income households in India”.
The 30 million micro, small and medium–sized enterprises in India today account for 45% of Indian industrial output, yet only 5-10% have access to formal sources of funding. The market for financing such enterprises is expected to grow from US$ 1.5 billion to US$ 6.35 billion by 2020. The total affordable housing shortage in India today represents a financing requirement of US$ 185 billion.
IFMR Capital has, over the last five years, developed a specialized platform for enabling access to finance for these sectors. With over US$ 1 billion of financing enabled across 150 plus capital market transactions, IFMR Capital is well poised to cater to the requirement of capital across these sectors.
LeapFrog has significant experience investing in and building profitable financial service companies reaching emerging consumers in growth markets. In 2013, LeapFrog’s portfolio companies reached 19.5 million people across 13 countries. Over 15 million of these people are low-income or emerging consumers, the vast majority with limited or no previous access to financial services.
Rothschild acted as financial advisor to IFMR Capital.