David Gonski, Andy Kuper take LeapFrog to $US2bn

Businessman David Gonski. Picture: AAP Image/Mick Tsikas.

In one of the great business coups of the year, David Gonski and Andy Kuper have just landed $US500m ($650m) of investment funding from Singapore giant Temasek.

The deal now takes Dr Kuper’s Sydney based LeapFrog Investments’ funds under management to $US2bn. The two rainmakers believe it will change the landscape for impact investing – investing that delivers both a social or environment impact and a financial return. Dr Kuper calls it “profit with purpose”.

Behind this deal is a story of how the country’s most connected businessman, David Gonski, skillfully leveraged his relationships to deliver half a billion US from Singapore Inc for an Australian business.

“David joined our global leadership council,” says Dr Kuper. “It was David and Simon Israel, who is also on that council — and who many years ago was the president of Temasek and is now chairman of Singapore Post — who put me together with the CEO of Temasek. We were very clear that we were looking for a partner to build a really enduring scaled institution.”

The Temasek-LeapFrog partnership is the largest ever commitment to an impact investor worldwide.

Since Bill Clinton launched a then 33-year-old Andy Kuper and LeapFrog in 2008, the businesses it has invested in across Asia and Africa have grown on average 30 per cent a year as the company has ridden the megatrends of half of humanity getting smart phones and the development of telemedicine. LeapFrog reaches 212 million people with healthcare or financial services and provides direct employment to over 130,000 people.

In a statement, the Singapore government owned Temasek’s head of impact investing Benoit Valentin says: “Our partnership with LeapFrog, with its focus on serving underserved markets, underscores Temasek’s commitment to investing for impact, and the contributions these investments make towards shaping a better world for our communities.”

David Gonski argues the huge commitment by Temasek should be a strong signal to other major funds. “$US200bn is the size of Temasek. Our Future Fund is $180bn, so it’s roughly twice that. The Singaporeans, they are long-term thinkers. Temasek coming in now is going to endorse this industry, and watch them; the others will start to go and they are right.”

“We used to work out that about $250m made the fund manager worth looking at — look at it now, over $US2bn of commitments.”

The bulk of the new money will anchor future funds but Temasek will also take a minority stake in LeapFrog itself. It will have one board seat but will not be involved in any of the decision-making bodies of LeapFrog. The investment allows Dr Kuper to power up his team: on the customer side to deliver more affordable products; in digital strategy; and importantly in impact measurement.

No one else has a data set of so many millions of emerging customers, according to Dr Kuper. “The ability to mine that and say: What do these customers really need, what products do they need? How should we design companies to best distribute to them? How do we develop the metrics for that? That ability to build from the customer backwards is really enhanced by getting this capital on the balance sheet.”

Mr Gonski joined LeapFrog’s Leadership Advisory Council just a few months ago, but Dr Kuper has been on his highly attuned radar for about 10 years as he scaled up market leaders and then on-sold them to players like Prudential, Swiss Re and Standard Chartered.

Without doubt, what has delivered the half a billion dollar Temasek money is the veteran business leader’s connections at the highest intertwined levels of Singapore business and government, carefully nurtured while on the board of Singapore Airlines, Singapore Telecom and as chairman of the ASX (where a merger with the Singapore stock exchange was explored). These include people like Euleen Goh, one of Singapore’s most sought after female directors who served of the boards of both Singapore Airlines and SGX.

“When you have a good product, there are many authors dealing with that product,” says Gonski. “Don’t underestimate Simon Israel: incredible man and he was my chairman at Singtel. This guy Andy Kuper is very good at running a team. I would say he is the maestro, but he certainly used all our contacts, is that a fair statement?” As Gonski says this he turns to Kuper with a smile.

Adding to the network was former World Bank president and Temasek board director Robert Zoellick, whom Andy Kuper met when both were part of the Axa Stakeholder Panel for ESG investment.

Gonski, Israel and former Prime Minister Julia Gillard’s role on the LeapFrog global advisory council all played a part in Temasek’s decision to invest, but referrals went both ways. Dr Kuper said Gonski and Israel’s long and close relationship with Temasek was critical to his decision to take on the Singaporean giant as his first external investor in the manager. “To me it was exceptionally assuring, that level of trust that existed between David and Simon and Temasek, knowing that they are in fact values aligned and that what is on the tin is actually inside.”

Andy Kuper said collaboration with Temasek could include further co-investing with LeapFrog. “They have grown a country from relatively low income to relatively high income iconic country. This is a group that understands and they are based in Asia and also invest in Africa.”

For those looking to access emerging growth markets, Dr Kuper says LeapFrog offers a “safe pair of hands”. “If you are wanting to invest in Indonesia or India, the vast majority are emerging consumers. Yes, you can buy Unilever stock that serves very large numbers of people but you’re going to get far broader and better returns and risk management with impact.”

The LeapFrog manager said that in 15 years, he has never had to shut a company down and through the pandemic LeapFrog businesses like WorldRemit, the fast-growing cross-border digital payments company and GoodLife, the largest healthcare provided in East Africa, proved their worth. “That pharmacy was able to go online, get passports for its delivery drivers to get through the police roadblocks so that medications could be delivered and they grew very significantly.”

Globally impact investing has grown from $US7bn just over a decade ago to $US700bn today. Andy Kuper sees the Temasek deal as a watershed: both model and scalability are now proven. His LeapFrog ambition is to reach one billion low income emerging consumers by 2030 and he has high hopes that by the whole industry scaling up, 4 billion people can be reached by commercial means.

For his mentor, David Gonski this is an A-Team moment. He must just love it when a plan comes together. “I sat this morning eating my cornflakes and watching the CEO of AstraZeneca who lives on the north shore of Sydney, which I find amazing – well, we’ve got a second one,” says Gonski.

“This is a big story that we can get international talent like Andy, like Pascal Soriot living here but doing their business worldwide. He stays up all night. But that’s his problem,” Gonski laughs.

“I’m as proud as punch that an Australian is somewhere in that mix. Who would have thought?”