Baobab Group, a global financial services company with a loan portfolio exceeding $900 million, has fully acquired Baobab Nigeria, its local subsidiary. This move marks the first-ever exit for Alitheia Capital and Goodwell Investments from their jointly managed uMunthu Fund—and it’s a big win.
The acquisition delivered a 3x return on uMunthu’s initial 2012 investment in Baobab Nigeria, formerly known as Microcred Microfinance Bank. Beyond just strong financial returns, this exit contributed to the fund’s 39.3% internal rate of return (IRR)—a key measure of annual investment profitability.
A Rare Private Capital Exit in Africa
The exit comes at a time when private equity exits in Africa are at a historic low. While 82 exits were recorded in 2022, the number dropped by 48% in 2023 to just 43. By the third quarter of 2024, only 31 exits had been recorded, suggesting a continued slowdown.
Exits are critical—they signal how attractive a market is to investors. With Africa lagging behind other emerging regions like Asia, where exits exceeded $65 billion, the continent risks losing foreign capital to markets with stronger and faster returns.
Baobab Nigeria’s Growth Story
When Alitheia and Goodwell first invested, Baobab Nigeria was a tiny operation—just a single-room bank in Kaduna. Today, it’s a top-three, nationally licensed microfinance institution with:
✅ 38 branches across 16 states
✅ A customer base that grew from 19,000 to 230,000
✅ A 37x increase in its balance sheet size
✅ A 43.5x growth in its loan book
Despite this massive expansion, Baobab Nigeria has stayed true to financial inclusion. The bank’s average loan size is just ₦2 million ($1,300), and average deposits are ₦91,000 ($60)—keeping services accessible to individuals and small businesses.
“This was a bank operating out of a single room in northern Nigeria when we invested, and today it is a top-three nationally licensed microfinance bank,” said Tokunboh Ishmael, Managing Partner at Alitheia. “We’re proud of what’s been achieved together and excited for Baobab Nigeria’s future.”
The Role of Patient Capital
The fund credits Baobab Nigeria’s success to:
🔹 Local governance expertise
🔹 Financial structuring guidance
🔹 In-depth market insights
🔹 Strategic access to key networks
“This exit isn’t just proof of Baobab Nigeria’s impressive financial growth, but also the power of patient capital to deliver both financial and impactful returns,” uMunthu Fund said in a statement.
As Baobab Nigeria enters its next phase under full ownership of Baobab Group, this deal underscores the long-term potential of microfinance in Africa—and how strategic investments can unlock massive value in the region.
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