Baobab Group Acquires Nigeria Unit from Alithea, Goodwell
TLDR
- Baobab Group, a global financial services provider with over $900 million in its loan portfolio, has fully acquired Baobab Nigeria
- The deal marks the first exit for the uMunthu Fund, jointly managed by Alitheia Capital and Goodwell Investments
- The exit delivered a 3x return and contributed to uMunthu’s internal rate of return of 39.3%
Baobab Group, a global financial services provider with over $900 million in its loan portfolio, has fully acquired Baobab Nigeria, formerly Microcred Microfinance Bank. The deal marks the first exit for the uMunthu Fund, jointly managed by Alitheia Capital and Goodwell Investments, which had invested in Baobab Nigeria in 2012.
The exit delivered a 3x return and contributed to uMunthu’s internal rate of return of 39.3%. Since the initial investment, Baobab Nigeria has expanded from a single branch in Kaduna to 38 branches across 16 Nigerian states, growing its customer base from 19,000 to 230,000. The bank’s loan book grew 43.5 times and its balance sheet expanded 37-fold while continuing to focus on small-ticket loans and deposits.
The transaction comes amid a broader decline in private equity exits in Africa. Only 43 exits were recorded in 2023, down 48% from the previous year, and just 31 exits were noted by Q3 2024.
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Key Takeaways
uMunthu’s successful exit from Baobab Nigeria demonstrates the long-term value of patient capital in Africa’s microfinance sector, even as overall private capital exits remain sluggish across the continent. With average loan and deposit sizes of just $1,300 and $60 respectively, Baobab Nigeria underscores how inclusive financial services can scale with the right support. However, the declining trend in exits across Africa—compared to stronger performance in markets like Asia—highlights the challenge of attracting new private capital to the region. Demonstrated outcomes like this may help restore investor confidence and underscore the potential for both impact and profitability in African financial services.
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