Baobab acquisition delivers 3x return for Alitheia and Goodwell

Baobab, a global financial services group with over $900 million in its loan portfolio, has fully acquired Boabab Nigeria, its local subsidiary, marking the first exit for Alitheia Capital and Goodwell Investments from their jointly managed uMunthu Fund. 

The acquisition gives uMunthu a 3x return on its original 2012 investment in Baobab Nigeria, formerly Microcred Microfinance Bank, which offers banking services to individuals and small businesses in underserved areas. The acquisition also contributed to the fund’s 39.3% internal rate of return—a measure of the annual profitability of its investments.

The exit comes as private capital exits—returns on investments—in Africa remain below their 2022 peak of 82. Only 43 exits were recorded in 2023, a 48% decline from 2022, and the 31 exits recorded by 2024’s third quarter indicate that last year’s numbers are similar to 2023. 

Since Alitheia and Goodwell’s initial investment, Baobab Nigeria has expanded from a single branch in Kaduna to 38 branches across 16 states, growing its customer base from 19,000 to 230,000.  During this period, the bank’s balance sheet expanded 37-fold, while its loan book grew 43.5-fold, according to uMunthu. Despite its rapid growth, the bank focuses on small-scale financial inclusion, with average loan and deposit sizes of ₦2 million ($1,300) and ₦91,000 ($60), respectively.

“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 Alitheia’s managing partner, Tokunboh Ishmael. “We’re proud of what’s been achieved together, and look forward to seeing where the future will take Baobab Nigeria.”

The fund said in a statement that the growth strategy of Boabab Nigeria was supported by local governance expertise, financial structuring advice, local market insights, and access to key networks provided by uMunthu. 

Exits signal the viability of investing in a region, and with Africa lagging behind other developing markets like Asia—where exits exceeded $65 billion—the continent risks losing out on foreign capital to regions with stronger returns.

“This [exit] is not only a testament to the impressive growth and financial stability Baobab Nigeria has achieved with the support of these two investors, but it also proves the ability of patient capital to drive both financial and impactful returns,” uMunthu said in a statement.