Sustainability Impacts: Measurements and Governance Welcome - PowerPoint PPT Presentation

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 Business School

Setting the Scene Alan Thornburrow Scotland Director for Business in the Community

Profit with Purpose How to serve 4 billion consumers in global growth markets Nick Moon, Partner, LeapFrog Investments

M A R K E T O P P O R T U N I T Y Emerging markets are the critical drivers of global growth Outpacing decelerating growth in developed markets Asia & Africa are driving this macro trend, with … underpinned by the fast growth and low world’s fastest growing economies… penetration of financial and healthcare 4% 2% Underpenetration 28% 66% 1.3 49% 9% population in hospital beds per 1k 22% 2% LeapFrog’s markets people in LeapFrog’s gain in with no account at a markets vs. WHO share 53% financial institution benchmark of 3.5 beds of 38% global $4.2 trn $4+ trn GDP 7% 7% Growth in new deposits and of all global health 2015 2050 $2.1 trn in new credit expenditure will come Latin America & Caribbean Asia by 2025 to come from from emerging Sub-Saharan Africa North America & EU emerging markets economies by 2022 MENA 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) 5 C O N F I D E N T I A L

L E A P F R O G O V E R V I E W 4 billion emerging consumers are rising into the middle class Their spending power is predicted to reach $30 trillion by 2025 The lifecycle of the modern emerging consumer … … shows clear demand for: Financial Services o Credit o Savings Disability Hospital o Pensions University Family o Insurance Gifts travel School education Own Healthcare Business Buy o Retail pharmaceuticals House Wedding Kids o Single-speciality Buy car services Bank Job account o New delivery models Alternative distribution o Mobile distribution o Innovative credit scoring Life Stage 1 Life Stage 2 Life Stage 3 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. 6 C O N F I D E N T I A L

P R O F I T W I T H P U R P O S E Safety nets and springboards for low income people Springboard : economic wellbeing and With critical health improves productivity and ability to financial and invest for the future health tools Safety Nets : Access to quality and affordable tools mitigates the impact of key financial and health shocks Without critical financial and health tools

M A R K E T O P P O R T U N I T Y LeapFrog partners with consumer-centric companies in high-growth markets With an operational and consumer-focused skillset to generate above-market growth LeapFrog’s differentiated model Performance of portfolio companies We invest in consumer-centric 1. 42.0% financial services and healthcare businesses to deploy an operational value-add toolkit. Consistent, scalable and 2. replicable strategy across 16x emerging markets, invested in 21 portfolio companies. 19.5% 5.4% These companies reach over 3. 2.7% 111m people, 85% of whom are emerging consumers. We engage Global GDP growth LeapFrog target LeapFrog target LeapFrog avg. directly with these consumers to (2015) markets GDP markets financial portfolio company growth services growth revenue growth understand their needs. (2015) (2010-2015) 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. 8 C O N F I D E N T I A L

C A S E S T U D I E S BIMA: Innovative mobile financial services and health care provision Annual Sales Development Investment (in $ millions) o Mobile insurance distributor partnering with leading mobile network operators across 15 markets, disrupting traditional insurance models 32 CAGR +106% o LeapFrog first invested in March 2013 and participated in subsequent 23 rounds over time to invest a total of $14m for a minority shareholding 10 o Proprietary origination via LeapFrog team 4 Performance FY13 FY14 FY15 FY16 o Over LeapFrog’s holding, BIMA grew rapidly, selling over 30m insurance policies and building an innovative teledoctor service Sales per Active Customer (in $) o 94% of customers are emerging consumers and 75% are accessing insurance for the first time 6.0 CAGR +34% Exit 4.3 o Strategic sale to Allianz in December 2017 2.7 2.5 o Realised returns of 37% IRR and 3.2x MOC (Gross USD) o Viewed globally as a stellar example of a digital insurance success story with scale and attractive unit economics FY13 FY14 FY15 FY16 Source: FIIRM (Q3 2017) 9 C O N F I D E N T I A L

C A S E S T U D I E S LeapFrog used multi-disciplinary skills to create value, expand operations and grow partnerships 15 markets of operation LeapFrog value creation initiatives o Synergies with other LeapFrog portfolio companies (e.g. Underwriting 15m 189m 161m 16m Express Life) partnerships 11m o Providing local underwriting support, claims handling, etc. 102m 9m o Designed new health product providing hospital cover for Product $0.70/mo, which has since been sold to more than 1m low design 7m income people and replicated in eight additional markets o Revised reinsurance policy to better manage risk, provided by Reinsurance 28m 54m 21m 258m 8m LeapFrog investors at attractive rates strategy • Asia a Pacific fic: Bangladesh, Cambodia, Indonesia, Philippines, Sri Lanka, o Supported drafting of new license application in Cambodia Regulatory Pakistan, Papua New Guinea & Pacific • Latin n Amer erica: Haiti, Honduras, Paraguay support • Africa: Ghana, Tanzania, Senegal o Market research to better understand needs of the emerging Population Consumer consumer segment and product understanding 1.3bn addressable customer base research o New innovation via MFI partnerships has already yielded a MFI strategy partnership with BRAC in Bangladesh o LeapFrog supporting several senior management hires HR needed to build infrastructure for continued growth development o Involved in new country planning (e.g. Cambodia, Ghana, Strategic Pakistan, Sri Lanka) and commercial terms support 10 C O N F I D E N T I A L

BIMA Mobile: Impact results Over 30m people reached across 14 countries in 5 years Some previous insurance (23%) First-time insurance (77%) 11 Profit with Purpose

BIMA Mobile: Reaching the unreachable BIMA doubled the insurance coverage of Ghana and Bangladesh, in 3 years Ghana Bangladesh 88% 99% low income low income 99% 88% 95% 72% 60% 22% 4% 19% $1.25PPP/day $2.50PPP/day $5PPP/day $10PPP/day $1.25PPP/day $2.50PPP/day $5PPP/day $10PPP/day 12 Profit with Purpose

C A S E S T U D Y BIMA Health: A unique teledoctor service linking the payer- provider model 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 o In response to client feedback on BIMA’s health insurance products, BIMA developed an easy, quick and affordable medical advice offering o Unlimited calls for customers and family to a Customers also receive free diagnostic tests, discounts through doctor via a toll-free hotline; Doctors offer basic BIMA’s partnership network and a treatment, recommend drugs, organise follow up local medical directory. To inspire calls and give health tips, all via mobile phone. trust and demonstrate immediate o The teledoctor service has been launched in value, BIMA also offered free health screening to potential customers. Ghana, Bangladesh, Sri Lanka, Indonesia and Paraguay. Since launch, over 330,000 people BIMA’s teledoctor subscription have been reached. service gives customers medical consultations over the phone 13 C O N F I D E N T I A L

BIMA Mobile: Innovation for Health Ghana: Hospital Cover for $0.70c a month – 500,000 people in 18 months 532,995 349,840 174,900 96,190 21,320 1,165 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 14 Profit with Purpose