Weekly Roundup: OPIC’s Big Jump with LeapFrog; the Dearth of Do-gooder Drones

Friday
December 11
2015

Weekly Roundup: OPIC’s Big Jump with LeapFrog; the Dearth of Do-gooder Drones

With a $200 million planned investment by the U.S. government’s development finance arm, impact equity firm LeapFrog Investments has now attracted $1 billion in funds to invest in companies reaching low-income people with financial and healthcare services.

This week, the board of directors for the Overseas Private Investment Corporation (OPIC) approved the investment, as well as eight others. LeapFrog’s announcement hailed the OPIC investment as “the largest commitment in history to any impact fund manager.” That’s not something I could independently confirm. But it is one of OPIC’s largest single commitments to a private equity manager, an OPIC spokesman said.

Created in 2009, LeapFrog now counts about 15 portfolio companies. Last year those companies, which include a variety of microinsurance (life and health) and financial service providers, recorded a 60 percent average revenue and now serve 51.8 million people, according to LeapFrog.

This is the first deal between LeapFrog and OPIC, which committed overall $4.4 billion in new financing and insurance to private sector firms in emerging markets during fiscal 2015. The majority of OPIC’s investments involve multi-stakeholder, large-scale projects in energy and infrastructure, but impact equity (about 9 percent of the total invested in 2015) is growing as a destination.

Although there are still a few steps to complete before the financing is official, plans are to place it with LeapFrog’s Emerging Consumer Fund III, which will make investments in financial services and healthcare companies operating in South Asia, Southeast Asia and sub-Saharan Africa. LeapFrog owner and CEO Andrew Kuper said the commitment “marks a transformative moment for impact investing.”

“OPIC’s vision and capital are a magnet for other leading institutions, revealing how to invest in companies that reach billions of underserved consumers,” Kuper said. “The greatest financial and social opportunity of our era is to serve these real needs, tapping vast new markets, and achieving profit with purpose.”

One of LeapFrog’s biggest financial exits was when portfolio company Express Life, which sold microinsurance in Ghana, was sold to Prudential PLC in 2014.

In addition to a variety of large global investors like Alliance Trust and HESTA, leading U.S. investors in LeapFrog’s funds to date include AIG, J.P. Morgan, MetLife, Prudential Financial, RGA and TIAA-CREF. LeapFrog’s earliest investors were development finance institutions, and while OPIC may have been late to the party, it’s certainly making up for lost time.

– Scott Anderson

Military’s droning on

Two years ago, we here at NextBillion were excited about drones and how they represented “the merger of business and technology to create a meaningful improvement in people’s lives.”

We couldn’t have foreseen back then how drones would evolve more as weapons delivery systems than harbingers of relief.

In December 2013, we weren’t surprised that the United Nations – the world’s peacekeeping organization – was using drones extensively and we marveled at their potential to deliver last-mile healthcare. We quoted Peter Singer, director of the Center for 21st Century Security and Intelligence at the Brookings Institution: “There are so many ‘debates’ now where the people call themselves ‘pro’ or ‘anti’ drone, which is like being pro or anti computers, quaint but irrelevant.”

The tone has shifted. Mark Jacobsen told PRI this week that, because of drones’ legacy as weapons, “There’s a lot of skepticism and distrust (about drones) among aid organizations.” An active air force officer, Jacobsen dreamed up the Syria Airlift Project to help get aid to remote parts of Syria. He came up with a workable plan, but it’s sitting on a shelf “waiting for funding, partners and Turkish government approval.”

Meanwhile, the military is doubling down – literally – on drones. Gen. Herbert Hawk Carlisle, who is in charge of the U.S. Air Combat Command’s 325 drones, says his folks have been flying so many combat missions, they’re burning out. There are plans in place to double the program’s force, now estimated at 700.

The drones fly 60 missions around the world each day. Their streaming video has occasionally been used in humanitarian causes, but their reason for being is military operations; after all, they’re named Predators and Reapers. “It has led to criticism from human rights groups about the antiseptic nature of drones – as well as civilian casualties – and about the drones’ use in countries, including Somalia and Yemen, where the U.S. is not otherwise engaged in combat,” Tom Bowman reported for NPR yesterday.

It’s not shocking – and not the first time – that the military has exploited new technology. And we recognize that the world’s a complicated and often dangerous place. But that doesn’t mean that the development community has to cede unmanned airspace to weaponry. With more creativity and investment focused on the constructive uses of drones, maybe it’s possible to restore the positive buzz they once generated.

– Kyle Poplin

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