Alitheia Capital and Goodwell Investments have exited their investment in Baobab Nigeria after 12 years, the first exit from their uMunthu Fund. This transition reflects Baobab’s growth and stability in the financial sector and showcases the effectiveness of patient capital in combining financial and social outcomes. With the institution’s future under Baobab Group, new fundraising efforts are anticipated for continued growth and impact.
Alitheia Capital and Goodwell Investments have successfully exited their investment in Baobab Nigeria, marking a significant milestone as the inaugural exit from the joint uMunthu Fund. This exit follows over twelve years of investment, initially commencing with the GWAMDC fund before transitioning to the uMunthu Fund. The companies emphasized that this move reflects Baobab Nigeria’s substantial growth and financial stability, as well as the effectiveness of patient capital in generating financial returns alongside social impact.
The investors’ decision to invest in Baobab, formerly known as MicroCred, in 2012 was motivated by a mutual objective of promoting financial inclusion. Their ongoing support through the uMunthu Fund in 2015 represented the first instance of private capital in northern Nigeria’s financial sector, which had been predominantly managed by development finance institutions. Additionally, they became the first local investors to ensure Nigerian representation on Baobab’s board.
Under the guidance of Alitheia and Goodwell, Baobab Nigeria transformed from a singular microfinance institution into one of the nation’s leading microfinance entities. The investors provided essential governance, financial advice, and access to local networks, greatly contributing to this transformation. Reflecting on this progress, Alitheia Managing Partner Tokunboh Ishmael remarked on the remarkable journey of the institution from a modest operation to a top-tier national bank.
At the time of investment, a notable 70% of Nigeria’s population lacked access to financial services, especially in the northern regions. Recent government data from 2023 indicates that this figure has decreased to 26% nationally. Since Baobab’s initial investment in 2012, the institution has significantly increased its reach, serving 12 times more customers and expanding its branch network by 7.6 times while maintaining modest average loan and deposit sizes. The company’s balance sheet increased dramatically during this period, showcasing the benefits of patient capital.
The exit of Alitheia and Goodwell now heralds a new chapter for Baobab Nigeria, which is completely owned by its international parent, Baobab Group. This transition aims to ensure that Baobab Nigeria continues to grow and enhance its impact in the region. Additionally, with further exits anticipated in 2025, Alitheia and Goodwell are embarking on the fundraising phase for their uMunthu II Fund, seeking investors interested in achieving similar success and impact as demonstrated by Baobab Nigeria.
In conclusion, Alitheia Capital and Goodwell Investments’ exit from Baobab Nigeria highlights the success of patient capital in driving financial inclusion and organizational growth. Over twelve years, Baobab transformed from a single-unit operation to a leading microfinance institution, significantly expanding access to financial services in Nigeria. As Baobab moves under the full ownership of Baobab Group, the future appears promising for continual impact, with new fundraising efforts underway for their forthcoming fund.
Original Source: nairametrics.com
