Mumbai, India: LeapFrog Investments, the pioneering Profit with Purpose firm, has successfully exited its Fund II investment in Fincare, now known as AU Bank, an inclusive finance leader in India. This exit, via the on-market sale of shares, marks a significant milestone for LeapFrog’s Fund II, which has now fully exited its position in Fincare.

The exit represents a return of over 3.3x in rupees for LeapFrog’s Fund II. LeapFrog continues to hold its investment in the company through its Fund III and the team sees continued upside potential as the business progresses as a merged entity.

Since its first investment in 2017, followed by support in subsequent rounds, LeapFrog played a critical role in transforming Fincare from a microfinance institution into a full-service inclusive bank, expanding its product offerings and customer base. The merger with AU Small Finance Bank, effective since 1 April 2024, marked a landmark transaction in India’s inclusive financial services sector and was the largest microfinance or small finance bank deal in the last five years.

Over the investment period, Fincare’s assets under management (AUM) grew manyfold to more than INR 143 billion (US$ 1.7 billion), and its profitability increased 4x to more than INR 4 billion (US$ 47 million) as of the merger date. The bank’s reach now extends to over 17 million emerging consumers, primarily women in rural India. LeapFrog’s patient support during key moments, such as India’s demonetisation and the COVID-19 pandemic, enabled Fincare to navigate challenges and capitalise on growth opportunities.

Beyond capital, the LeapFrog team played a key role in supporting Fincare’s digital strategy alongside other investors, including the development and launch of the digital savings account Fincare 101. LeapFrog also helped expand the product range and improve customer engagement, driving operational efficiencies. As one of the first institutional investors, LeapFrog contributed to strengthening Fincare’s governance and compliance frameworks, ensuring its foundation for sustained growth including with continued backing from LeapFrog’s Fund III.

Pranav Kumar, Partner at LeapFrog Investments said: “Fincare is a shining example of how social impact and strong commercial returns can go hand in hand. This was enabled by the specialist strategy and operational engagement LeapFrog has honed over many years. India’s deep capital markets provided a number of exit opportunities but ultimately the merger with AU Bank and consequent on-market sale was the best result for Fund II. It is gratifying to see the franchise continue as part of India’s largest inclusive finance bank.”

 Fernanda Lima, Partner and Co-Head Asia Financial Services at LeapFrog Investments, said: “LeapFrog is proud to have contributed to building Fincare into a South Asian impact champion. Our work has helped Fincare to expand the range of products it offers to millions of low-income consumers, as well as supported major digitisation upgrades that lowered costs and improved convenience and quality, especially for women and rural customers. Working with Rajeev and his team over the last eight years has been a truly inspiring journey, and we believe the combined bank is poised for dramatic growth and impact in years ahead.”

LeapFrog invests in healthcare, financial services and climate solutions businesses in high-growth global markets. Its companies deliver distinctive impact and robust returns, growing revenues on average 23% a year. LeapFrog companies now reach 559 million people with essential services in 37 countries. The firm has raised billions of dollars from global institutional investors, including a $500m commitment by Temasek to LeapFrog and its growth equity funds. LeapFrog has twice been ranked by Fortune as one of the top Companies to Change the World, alongside Apple and Novartis, and was named inaugural Pioneer in Impact by the FT and IFC at the Transformational Business Awards.

For more information, go to: www.leapfroginvest.com.

Montfort Communications

LeapFrog@Montfort.London