Baobab Group, a global financial services entity with a loan portfolio exceeding $900 million, has fully acquired its Nigerian subsidiary, Baobab Nigeria. This acquisition marks the inaugural exit for the uMunthu Fund, jointly managed by Alitheia Capital and Goodwell Investments, yielding a threefold return on their initial 2012 investment.
Baobab Nigeria, formerly known as Microcred Microfinance Bank, provides banking services to individuals and small businesses in underserved regions. Since the initial investment, the institution expanded from a single branch in Kaduna to 38 branches across 16 states, increasing its customer base from 19,000 to 230,000. During this period, the bank’s balance sheet grew 37 times, and its loan book expanded 43.5 times. Despite rapid growth, Baobab Nigeria maintains a focus on small-scale financial inclusion, with average loan and deposit sizes of ₦2 million (approximately $1,300) and ₦91,000 (approximately $60), respectively.
Tokunboh Ishmael, Managing Partner at Alitheia Capital, reflected on the journey, stating,
“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.”
She expressed pride in the achievements and optimism for Baobab Nigeria’s future.
The uMunthu Fund attributed Baobab Nigeria’s growth strategy to local governance expertise, financial structuring advice, market insights, and access to key networks provided by the fund.
This exit occurs amid a decline in private capital exits in Africa, with 43 exits recorded in 2023; a 48% decrease from the 82 exits in 2022. By the third quarter of 2024, 31 exits were recorded, indicating a continuation of this trend. Despite these challenges, the successful exit from Baobab Nigeria demonstrates the potential for impactful investments in the region.
The uMunthu Fund emphasised that this exit not only showcases Baobab Nigeria’s impressive growth and financial stability but also highlights the efficacy of patient capital in delivering both financial returns and meaningful impact.
