Global impact fund manager LeapFrog Investments has secured commitments from Singapore state investor Temasek and the European Investment Bank (EIB) for its $500 million climate strategy targeting Asia and Africa.
Temasek has committed $100 million to the strategy, LeapFrog said in a statement. This is part of the overall $500 million that the state investor had committed, in 2021, to anchor LeapFrog’s future funds.
EIB, which is the lending arm of the European Union, has proposed to invest $50 million (46 million euros) to the LeapFrog Asia and Africa Climate Transition Fund, according to its website. The investment is subject to approval from the lender’s governing bodies.
The LeapFrog Asia and Africa Climate Transition Fund is a growth equity vehicle that will focus on small- and medium-sized enterprises (SMEs) and mid-caps supporting climate action and environmental sustainability in Asia and Africa, according to EIB. “The fund will contribute to the local private sector development supporting its green transition across different sectors (transport, energy, and environment),” it said on its website.
The EIB website states the fund is targeting to raise $600 million, though LeapFrog confirmed to DealStreetAsia that the official target is $500 million. DealStreetAsia had reported exclusively in May this year that LeapFrog is raising a $600-700 million climate fund.
London-based LeapFrog announced its $500m climate strategy in July this year at the US-UK Climate Mobilisation Forum in Britain. The strategy will focus on investments in companies that provide green tools and technologies such as 2-wheeler EVs, rooftop solar providers, and smart farming businesses.
Both EIB and Temasek are longstanding partners of LeapFrog.
EIB’s proposed equity participation in the Asia and Africa Climate Transition Fund would represent its fifth investment with LeapFrog. Earlier, the lender had committed $60 million to LeapFrog’s Emerging Consumer Fund IV, which has a target of $1 billion and plans to hold its final close in February 2024.
“The early support of our longstanding partners Temasek and EIB shows that long-term and progressive investors understand the global challenge of tackling climate change holistically,” said Dr Andy Kuper, Founder and CEO, LeapFrog Investments in the statement.
LeapFrog’s climate team has built a robust pipeline of green businesses in Africa and emerging Asia to accelerate this green global transition, with initial investments to be announced in 2024, the release added. Its previous funds have already backed successful climate companies such as Sun King, the largest pay-as-you-go solar financier in Africa.
LeapFrog primarily targets growth-stage private equity opportunities in emerging Asia and Africa, with India as its biggest market currently, followed by other Southeast Asian economies such as Vietnam, Indonesia, and Thailand. Founded in 2007, it has offices across Asia, Africa, Australia, and the UK.
“Our partnership with LeapFrog is one of the core pillars of our impact investing strategy and underscores our belief in the potential of impact investing to unlock capital to build a better, more inclusive, and sustainable world where every generation prospers,” added Benoit Valentin, Head of Impact Investing, Temasek.
South Asia, Southeast Asia, and Africa today represent 25% of global climate emissions but could account for as much as 73% of emissions by 2050 without urgent action, LeapFrog said in its statement.