Global players recognise ‘value of emerging markets’

EMERGING – market investment company LeapFrog Investments has raised R4.2bn ($400m) for a new fund, 12 months after the $204m first close of the fund, it said on Wednesday.

The company, which was set up in 2008 by five South Africans to focus on early-stage investments in financial services in Africa and Asia, has invested in 10 companies, including AllLife in South Africa which provides insurance to those with HIV, AIDS and diabetes.

It said South Africa would be a priority country for new investments, with as much as R550m available for any single investment.

“There is an increasing realisation among global financial services players that emerging consumers represent the growth market of the future,” said Gary Herbert, partner at LeapFrog, former MD of Alexander Forbes and co-founder of Investment Solutions.

Of the new fund, $100m (R1.1bn) is allocated to South Africa. Investors in the new fund include some of the world’s biggest insurers, such as Axa, MetLife and AIG.

Countries expected to benefit include Kenya, Ghana, Nigeria, India, Sri Lanka, Indonesia and the Philippines.

“Axa is committed to offering protection through financial services to emerging-market consumers globally, a vast population that will shape the financial services industry in the decades to come. We are proud to support industry pioneer LeapFrog in doing the same,” AXA deputy CEO Denis Duverne.

A “historic market opportunity to provide over a billion underserved consumers” existed, according to research received from LeapFrog.

Positive economic growth for emerging markets, strong financial services growth in these markets and a large contingent of relatively untapped emerging-market consumers with rising consumption, were cited as primary drivers of this trend.

Over the past decade, emerging-market growth had significantly outperformed developed market growth and this was projected to continue, said LeapFrog.

Quoting McKinsey & Company, it said that by 2025 emerging markets were forecast to generate 74% of the projected $50-trillion increase in global gross domestic product and consume an additional $18-trillion. This long-term growth prospect remained unchanged, despite current volatility in some emerging markets.

The fund’s focus on meeting financial services consumption growth would include sub-Saharan Africa, South Asia and Southeast Asia, said LeapFrog. – BDLive

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