The European Investment Bank, an EU development finance institution, is considering a $50 million commitment to LeapFrog Investments‘ debut climate fund, according to a document posted to the bank’s website. The LeapFrog Asia and Africa Climate Transition Fund has a target size of $600 million, according to the document.
EIB is an active investor in impact funds; it has made commitments this year to funds managed by Blue Orchard, Exagon Impact Capital and Mirova, among others. It has also committed to LeapFrog’s fourth emerging consumer fund, which is currently in market.
Temasek, the influential Singaporean investor that formed a strategic partnership with LeapFrog in 2021, is committing $100 million to the new climate fund. Other investors “will be revealed in due course”, said LeapFrog in a statement on Thursday.
“The swift and 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 Andy Kuper, LeapFrog founder and CEO.
Details of LeapFrog’s push into climate investing have been emerging for the past 12 months. In November 2022, the firm announced the development of the climate platform with the hire of Nakul Zaveri, a former managing partner at sustainability-focused firm Relativity Investment Management. This summer, LeapFrog made a public commitment to invest $500 million into climate-related emerging markets businesses.
On Thursday the firm released a detailed research report: The Investor Roadmap for Inclusive Green Growth, produced in collaboration with Temasek and CGAP, a unit of the World Bank. The report identifies areas of climate technology where a “green discount” applies in emerging markets; in other words, areas where the green alternative is now more commercially viable and offers a lower-cost option to consumers than incumbent, less sustainable alternative. Examples include electric scooters in India, rooftop solar in Kenya and smart farming in Vietnam. These technologies are “already 14 percent to 75 percent cheaper than incumbent products, offering low-income consumers huge savings of as much as $500 a year”, the report states.
The report also notes that while South Asia, Southeast Asia and Africa today represent just 25 percent of global emissions, they could account for as much as 75 percent of emissions by 2050 unless action is taken.
“There is huge potential for emerging markets to leapfrog a generation of traditional and incumbent technology with access to clean technology, while improving lives and livelihoods,” said Benoit Valentin, head of impact investing at Temasek. “We need to take urgent action, tap on the significant green discount, and seize investible opportunities for a greener and more inclusive future.”
- Further reading: Nakul Zaveri, partner and co-head of climate investment strategy for LeapFrog, writes for New Private Markets about the EM climate investment challenge and opportunity.