Profit with Purpose firm LeapFrog Investments has exited its Fund II investment in Fincare, now known as AU Bank, an inclusive finance leader in India, via an on-market sale of shares.
The exit represents a return of over 3.3x in rupees for LeapFrog’s Fund II. However, the firm 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 AUM grew to more than INR143bn ($1.7bn), and its profitability increased 4x to more than INR4bn ($47m) 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.
