Hong Kong-based insurer AIA Group has committed $200 million to impact funds managed by Temasek-backed LeapFrog Investments, its first such allocation, amid rising awareness about ESG investments in Asia.
The development comes after DealStreetAsia reported in May that the London-based specialist impact fund manager is raising $600-700 million for its new fund focusing on climate companies.
LeapFrog aims to support green growth opportunities for low-income consumers and producers across emerging markets with a focus on Asia and Africa, at a time when developed markets, including the US, Canada, and Europe, still contribute to the bulk of the global impact assets under management (AUM). But the interest in impact investing is rapidly picking up in Asia.
“Asian clients now account for almost 30% of our investor base, up from less than 5% three years ago. It is a significant increase as Asia is now almost as important as a source of funding as Europe or the US,” LeapFrog founder and CEO Any Kuper told the Financial Times, which first reported about the news.
Interest in impact investments is mainly coming from sovereign wealth funds, family offices, and ultra-high-net-worth individuals (UHNWIs), said Kuper.
The damaging impacts of climate change are being seen more quickly across many Asian countries than in the US or Europe, encouraging Asian investors to “accelerate their response,” said Kuper. He added that the action from the private sector aligns well with wealthy Asian nations, which are viewing green investments as a core to their social mandates.
Alongside the $200-million commitment, AIA and LeapFrog also agreed to build a new strategic partnership, under which the duo will work together to develop products and services in their shared areas of interest in financial services, healthcare, and climate solutions, according to the FT report.
This partnership is the third-biggest for LeapFrog, which secured a $500-million commitment from Singapore state investor Temasek Holdings in 2021 and a $350-million allocation from the US insurer Prudential Financial in 2016.
The past several months saw LeapFrog expand its climate investment strategy team by appointing Nakul Zaveri, who was previously with sustainability-focused growth private equity (PE) firm Relativity Investment Management, as a new partner.
In early March, the firm added several new hires, including Saurabh Bajaj as its director of investments overseeing its climate strategy in Southeast Asia. Bajaj was formerly a director of investments at food and agriculture-focused PE firm Proterra Investment Partners.
Established in January 2007 by Kuper with a mantra of “profit with purpose,” LeapFrog typically invests $20-75 million for a majority or an influential minority stake in companies that are focused on providing services to address the needs of emerging consumers.
LeapFrog-backed companies have reached 450 million people, or about 5% of the world’s population, as of May 2023, according to the firm’s 2022 Impact and Investment Results. In total, its portfolio companies generated $4.4 billion of collective revenues in 2022.