Sustainability Impacts: Measurements and Governance Welcome - - PowerPoint PPT Presentation

▶
sustainability impacts
SMART_READER_LITE
LIVE PREVIEW

Sustainability Impacts: Measurements and Governance Welcome - - PowerPoint PPT Presentation

Dec 15, 2022 229 likes •510 views

Sustainability Impacts: Measurements and Governance Welcome Welcome Address Dr Sarah Ivory Deputy Director of Sustainable Business Initiative and an Early Career Fellow in Climate Change and Business Strategy at the University of Edinburgh

slide-1
SLIDE 1

Sustainability Impacts: Measurements and Governance Welcome

slide-2
SLIDE 2

Welcome Address Dr Sarah Ivory

Deputy Director of Sustainable Business Initiative and an Early Career Fellow in Climate Change and Business Strategy at the University of Edinburgh Business School

slide-3
SLIDE 3

Setting the Scene Alan Thornburrow

Scotland Director for Business in the Community

slide-4
SLIDE 4

Profit with Purpose

How to serve 4 billion consumers in global growth markets

Nick Moon, Partner, LeapFrog Investments

slide-5
SLIDE 5

Emerging markets are the critical drivers of global growth

Outpacing decelerating growth in developed markets

M A R K E T O P P O R T U N I T Y C O N F I D E N T I A L

Asia & Africa are driving this macro trend, with world’s fastest growing economies… …underpinned by the fast growth and low penetration of financial and healthcare

22% gain in share

  • f

global GDP

Note: LeapFrog Target Countries include Ghana, India, Indonesia, Kenya, Nigeria, Philippines, South Africa and Sri Lanka Source: The Fastest Billion, Paul Collier; Asia 2050, ADB (2011); World in 2050, PwC (2015); World Bank Findex (2016); McKinsey (2016)

66%

population in LeapFrog’s markets with no account at a financial institution

$4.2 trn

in new deposits and $2.1 trn in new credit by 2025 to come from emerging markets

1.3

hospital beds per 1k people in LeapFrog’s markets vs. WHO benchmark of 3.5 beds

$4+ trn

  • f all global health

expenditure will come from emerging economies by 2022

Underpenetration Growth

5 7% 7% 38% 53% 2% 9% 49% 28% 4% 2%

2015 2050

Latin America & Caribbean Asia Sub-Saharan Africa North America & EU MENA

slide-6
SLIDE 6

4 billion emerging consumers are rising into the middle class

Their spending power is predicted to reach $30 trillion by 2025

L E A P F R O G O V E R V I E W 6 C O N F I D E N T I A L

The lifecycle of the modern emerging consumer… …shows clear demand for:

Note: ECs are individuals excluded or underserved by businesses due to being a low-income consumer (income between $2-10 PPP), or due to other factors such as a health, caste, religion, ethnicity, gender etc.; Source: McKinsey & Co. Buy car Bank account Job Wedding Kids Buy House Own Business School education Family travel Gifts University Hospital Disability

Life Stage 1

Financial Services

  • Credit
  • Savings
  • Pensions
  • Insurance

Healthcare

  • Retail pharmaceuticals
  • Single-speciality

services

  • New delivery models

Alternative distribution

  • Mobile distribution
  • Innovative credit scoring

Life Stage 2 Life Stage 3

slide-7
SLIDE 7

Safety nets and springboards for low income people

P R O F I T W I T H P U R P O S E

Safety Nets: Access to quality and affordable tools mitigates the impact of key financial and health shocks Springboard: economic wellbeing and health improves productivity and ability to invest for the future

Without critical financial and health tools With critical financial and health tools

slide-8
SLIDE 8

LeapFrog partners with consumer-centric companies in high-growth markets

With an operational and consumer-focused skillset to generate above-market growth

M A R K E T O P P O R T U N I T Y 8 C O N F I D E N T I A L

LeapFrog’s differentiated model Performance of portfolio companies

2.7% 5.4% 19.5% 42.0% Global GDP growth (2015) LeapFrog target markets GDP growth (2015) LeapFrog target markets financial services growth (2010-2015) LeapFrog avg. portfolio company revenue growth since investment (Q3 2017)

Note: GDP percentages are real, target market and portfolio growth are nominal; target market FS growth is based on avg. insurance and credit growth in key target markets; portfolio avg. revenue growth is calculated as LCU compound average annual revenue growth for all portfolio companies since investment. Source: World Bank World Development Indicators (2015); Swiss Re Sigma–World Insurance (2015); Company accounts; LeapFrog analysis.

16x

We invest in consumer-centric financial services and healthcare businesses to deploy an

  • perational value-add toolkit.

Consistent, scalable and replicable strategy across emerging markets, invested in 21 portfolio companies. These companies reach over 111m people, 85% of whom are emerging consumers. We engage directly with these consumers to understand their needs.

1. 2. 3.

slide-9
SLIDE 9

BIMA: Innovative mobile financial services and health care provision

C A S E S T U D I E S

Investment Performance Exit

  • Mobile insurance distributor partnering with leading mobile network
  • perators across 15 markets, disrupting traditional insurance models
  • LeapFrog first invested in March 2013 and participated in subsequent

rounds over time to invest a total of $14m for a minority shareholding

  • Proprietary origination via LeapFrog team
  • Over LeapFrog’s holding, BIMA grew rapidly, selling over 30m insurance

policies and building an innovative teledoctor service

  • 94% of customers are emerging consumers and 75% are accessing

insurance for the first time

  • Strategic sale to Allianz in December 2017
  • Realised returns of 37% IRR and 3.2x MOC (Gross USD)
  • Viewed globally as a stellar example of a digital insurance success story

with scale and attractive unit economics

9 C O N F I D E N T I A L Source: FIIRM (Q3 2017) 4 10 23 32 FY13 FY14 FY15 FY16 CAGR +106%

Annual Sales Development

(in $ millions) 2.5 2.7 4.3 6.0 FY13 FY14 FY15 FY16 CAGR +34%

Sales per Active Customer

(in $)
slide-10
SLIDE 10

LeapFrog used multi-disciplinary skills to create value, expand operations and grow partnerships

C A S E S T U D I E S 10 C O N F I D E N T I A L

Underwriting partnerships

  • Synergies with other LeapFrog portfolio companies (e.g.
Express Life)
  • Providing local underwriting support, claims handling, etc.

Product design

  • Designed new health product providing hospital cover for
$0.70/mo, which has since been sold to more than 1m low income people and replicated in eight additional markets

Reinsurance strategy

  • Revised reinsurance policy to better manage risk, provided by
LeapFrog investors at attractive rates

Regulatory support

  • Supported drafting of new license application in Cambodia

Consumer research

  • Market research to better understand needs of the emerging
consumer segment and product understanding

MFI strategy

  • New innovation via MFI partnerships has already yielded a
partnership with BRAC in Bangladesh

HR development

  • LeapFrog supporting several senior management hires
needed to build infrastructure for continued growth

Strategic support

  • Involved in new country planning (e.g. Cambodia, Ghana,
Pakistan, Sri Lanka) and commercial terms

LeapFrog value creation initiatives 15 markets of operation

Population
  • Asia
a Pacific fic: Bangladesh, Cambodia, Indonesia, Philippines, Sri Lanka, Pakistan, Papua New Guinea & Pacific
  • Latin
n Amer erica: Haiti, Honduras, Paraguay
  • Africa: Ghana, Tanzania, Senegal
9m 11m 7m 21m 54m 28m 15m 8m 189m 161m 16m 258m 102m

1.3bn addressable customer base

slide-11
SLIDE 11

BIMA Mobile: Impact results

Over 30m people reached across 14 countries in 5 years

Profit with Purpose 11

First-time insurance (77%) Some previous insurance (23%)

slide-12
SLIDE 12

BIMA Mobile: Reaching the unreachable

BIMA doubled the insurance coverage of Ghana and Bangladesh, in 3 years

Profit with Purpose 12

Ghana Bangladesh

19% 72% 95% 99%

$1.25PPP/day $2.50PPP/day $5PPP/day $10PPP/day

4% 22% 60% 88%

$1.25PPP/day $2.50PPP/day $5PPP/day $10PPP/day

88%

low income

99%

low income

slide-13
SLIDE 13

BIMA Health: A unique teledoctor service linking the payer- provider model

C A S E S T U D Y

BIMA’s Teledoctor Service “In emerging markets, it is common to travel considerable distances or sacrifice hours waiting in a clinic before seeing a doctor. This, and the cost of consultations, often prevents people from seeking medical help.” -BIMA

  • In response to client feedback on BIMA’s health

insurance products, BIMA developed an easy, quick and affordable medical advice offering

  • Unlimited calls for customers and family to a

doctor via a toll-free hotline; Doctors offer basic treatment, recommend drugs, organise follow up calls and give health tips, all via mobile phone.

  • The teledoctor service has been launched in

Ghana, Bangladesh, Sri Lanka, Indonesia and

  • Paraguay. Since launch, over 330,000 people

have been reached.

13 C O N F I D E N T I A L

Customers also receive free diagnostic tests, discounts through BIMA’s partnership network and a local medical directory. To inspire trust and demonstrate immediate value, BIMA also offered free health screening to potential customers. BIMA’s teledoctor subscription service gives customers medical consultations over the phone

slide-14
SLIDE 14

BIMA Mobile: Innovation for Health

Ghana: Hospital Cover for $0.70c a month – 500,000 people in 18 months

Profit with Purpose 14

1,165 21,320 96,190 174,900 349,840 532,995 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14

slide-15
SLIDE 15

We have pioneered Profit with Purpose investing to achieve development impact

LeapFrog’s Theory of Change

P R O F I T W I T H P U R P O S E 15
  • Governance
  • Top talent
  • Consumer

insight

  • Digital

technology

  • E&S and

financial risk management

  • Profit w/ Purpose
  • Product or service

meets needs

  • Accessible and

affordable

  • Effective use to

mitigate financial

  • r health shock
  • Satisfied consumer
  • Greater company

financial returns

  • Different life

choices as a result

  • f service that

improve health or wealth

  • Market and macro

demonstration

  • Capital
  • Expertise

Inputs Activities Outputs Outcomes Impact

  • Profit w/ Purpose
  • Products provided

to excluded people

  • Customer scale

(# of customers)

  • Quality products &

services (tools)

slide-16
SLIDE 16

FIIRM is LeapFrog’s Profit with Purpose measurement framework

Built for financial services and health, measuring outputs and outcomes

I M P A C T M E A S U R E M E N T : F I I R M 16 C O N F I D E N T I A L
  • Revenue growth
  • NPBT / EBITDA margins
  • Service contribution ratios
  • Emerging consumer scale
  • Service quality & profitability
  • Good Governance Index
  • Minimum OOP cost
  • Treatment quality & efficiency
  • Contribution to critical SDGs
  • Enterprise Risk Management
Index, including ESG
  • Medical malpractice
  • Revenue growth
  • NPBT / EBITDA margins
  • Product contribution ratios
  • Emerging consumer scale
  • Product quality & profitability
  • Good Governance Index
  • Minimum premium
  • Claims payment speeds
  • Alternative access e.g. digital
  • Enterprise Risk Management
Index, including ESG
  • Solvency ratios

F

Financial Performance

I

Impact

I

Innovation

RM

Risk Management FINANCIAL SERVICES HEALTHCARE STANDARDS EMBEDDED

KING CODE

Emerging Consumer Insight

  • Direct validation of emerging consumer outcomes across emerging markets; iteration of any FIIRM assumptions
  • Direct consumer feedback to portfolio companies enhances performance and key area of LeapFrog value-add
  • Led by Raghu Kolli, Head of Consumer Insights and Innovation
slide-17
SLIDE 17

Knowing the Hearts and Minds of Consumers Consumer insight matters

LeapFrog’s emerging consumer research leverages qualitative, quantitative and macro- economic data to drive customer-centricity

  • Dedicated Consumer Insights

team led by Raghu Kolli

  • Spotlight: Raghu’s Goodlife

customer survey; insights from BIMA, Petra, IFMRC, Mahindra studies

  • IFMR Capital and Bombay

sandwich vendor here

Customer interviews at Goodlife pharmacy locations during DD Raghu Kolli Goodlife research team

P R O F I T W I T H P U R P O S E

15,000

customers interviewed

slide-18
SLIDE 18

Latest Profit with Purpose Results 27.3m

individual emerging consumer customers (all earning $2-$10 per day)

106.3m

emerging consumers reached (all earning $2-$10 per day)

126.2m

total people reached with financial inclusion products

40.1%

simple average annual revenue growth, 2013-2015

50.2%

women customers

117,006

jobs supported

Across all LeapFrog Funds

18 Source: FIIRM (Q4 2017)
slide-19
SLIDE 19

Impact contribution by Fund

Headline impact results

19

Fund I, 33.3 Fund II, 83.8 Fund III*, 6.8 LSAI, 2.4 Fund I, 25.2 Fund II, 74.1 Fund III*, 5.9 LSAI, 1.2 Fund I, 83,802 Fund II, 30,757 Fund III*, 648 LSAI, 1,799

Total People Reached: 126.2 million Emerging Consumers Reached: 106.3 million Jobs Supported: 117,006

31.8m

Total customers

27.3m

Low income customers

50.2%

Women customers

24.3%

Women full time employees

10

Essential services across financial services and healthcare

Note: Total and Emerging Consumer Reach does not equal sum of the parts due to customer overlap across Fund I and Fund II; Fund III results represent Goodlife and World Remit performance; Source: FIIRM (Q4 2017)
slide-20
SLIDE 20

LeapFrog delivers on the UN SDGs

P R O F I T W I T H P U R P O S E 20 C O N F I D E N T I A L

Our portfolio companies currently reach 106.3m emerging consumers with essential financial tools. We invest in diagnostics, delivery and distribution of high quality, affordable health care to emerging consumers. 50% of portfolio company customers are women; these companies employ over 7,000 women and have 30% female CEOs. Our portfolio companies support 117,000+ jobs. Portfolio companies provide essential financial and health tools, narrowing the inequality gap. We seek to create catalytic partnerships between investors and portfolio companies.

slide-21
SLIDE 21

LeapFrog Investors

$1bn+ of capital committed to LeapFrog’s Funds

L E A P F R O G O V E R V I E W C O N F I D E N T I A L

Exits achieving top-tier private equity returns

21
slide-22
SLIDE 22

Global strategics are looking to the emerging markets for growth

A trend set to continue in the face of anaemic growth in developed markets

L E A P F R O G O V E R V I E W 22 GWP Growth Developed Markets Pru. Asia 2016 (3.4%) 29.5% 2015 12.3% (3.4%) 2014 7.3% 23.5% 2013 (1.1%) 21.9% GWP Growth Global Group AXA Mansard Nigeria 2016 2.6% 25.0% 2015 6.3% (4.7%) 2014 (0.1%) 28.0% 2013 0.5% 9.2% 2012 5.2 24.4%

Insurance in Asia1 Dev. Market s CAGR 4% Asia CAGR 17% Insurance in Africa2 Group CAGR 3% Nigeria CAGR 16%

Revenue Growth Global Group Barclays Africa 2016 (2.7%) 7.7% 2015 (14.3%) 6.5% 2014 (7.8%) 6.3%

Banking in Africa3 Group CAGR

  • 8%

Africa CAGR 7%

3.9 10.0 11.8 15.1 2 4 6 8 10 12 14 16 2010 2020 base 2020 realistic 2020
  • ptimistic

Medical Products in Africa4

CAGR 10% 12% 14% US$bn SOURCE: 1,2,3 Annual reports for Prudential Plc, AXA Group, AXA Mansard, Barclays Group & Barclays Africa. Growth CAGR calculated over the time periods displayed, in reporting currency. 4 WHO, Wold Bank, IMF, African Development Bank, BMI & McKinsey & Company, McKinsey & Company analysis. Market set to exceed $10bn by 2020
slide-23
SLIDE 23

A proven track record across prior funds with target returns of 2.5x MOIC and 25%+ IRR

Exits executed across diverse geographies to a range of buyer types

L E A P F R O G O V E R V I E W C O N F I D E N T I A L

Fund I Vintage 2009, US$135m

LCU USD Realised IRR 29% 23% Realised MOIC 2.4x 2.2x DPI1 Top quartile Impact Multiple 2.3x

Note: Target returns are stated as USD Gross returns; Realised returns as at 28 February 2018 1 Cambridge Associates Emerging Markets Index (Q1 2017)

Fund II Vintage 2013, US$400m

LCU USD Realised IRR 28% 26% Realised MOIC 1.9x 1.8x DPI1 Top quartile Impact Multiple 2.7x Executed exits across minority and majority stakes:

  • Strategic/trade sales
  • Secondary sales
  • Sale in the public

markets

  • Buyback

To recognised brands: In diverse markets across South Asia, East & West Africa: At attractive valuations:

+58% USD

average valuation uplift at exit, compared to value of business as held in accounts

23
slide-24
SLIDE 24 P R O F I T W I T H P U R P O S E

1 BILLION

People Reached

Portfolio company operations
slide-25
SLIDE 25

Gordon McAndrew

Senior Investment Director, Investec Wealth & Investment

slide-26
SLIDE 26

Contact Details

Gordon McAndrew Senior Investment Director Telephone: +44 (0) 1312265000 Email: gordon.mcandrew@investecwin.co.uk

Bath 01225 341580 Edinburgh 0131 226 5000 Liverpool 0151 227 2030 Belfast 02890 321002 Exeter 01392 204404 London 020 7597 1234 Birmingham 0121 232 0700 Glasgow 0141 333 9323 Manchester 0161 832 6868 Bournemouth 01202 208100 Guildford 01483 304707 Reigate 01737 224223 Cheltenham 01242 514756 Leeds 0113 245 4488 Sheffield 0114 275 5100

Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange and the Investec Group. Please note that the value of investments and the income derived from them may fluctuate and investors may not receive back the amount originally invested. Past performance is not necessarily a guide to the future. Current tax levels and reliefs may change and the investments and investment services referred to may not be suitable for all investors. Investec Wealth & Investment Management Limited is registered in England. Registered No. 2122340. Registered Office: 2 Gresham Street. London. EC2V 7QP

slide-27
SLIDE 27

Question and Answer Session