Baobab, a global financial services group, has fully acquired its Nigerian subsidiary, Baobab Nigeria, marking a successful exit for uMunthu Fund, a jointly managed fund by Alitheia Capital and Goodwell Investments. The acquisition signals a 3x return on investment for the fund, which initially invested in Baobab Nigeria in 2012.

The exit is significant, given the current state of private capital exits in Africa. According to reports, 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. The successful exit of uMunthu Fund's investment in Baobab Nigeria serves as a testament to the viability of investing in the region.

Baobab Nigeria, formerly Microcred Microfinance Bank, has undergone significant growth since uMunthu's initial investment. The bank 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, Baobab Nigeria remains focused on small-scale financial inclusion, with average loan and deposit sizes of ₦2 million ($1,300) and ₦91,000 ($60), respectively. The bank's growth strategy was supported by local governance expertise, financial structuring advice, local market insights, and access to key networks provided by uMunthu.

Tokunboh Ishmael, managing partner at Alitheia, expressed pride in the achievements of Baobab Nigeria, 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." Ishmael added, "We're proud of what's been achieved together, and look forward to seeing where the future will take Baobab Nigeria."

The successful exit of uMunthu Fund's investment in Baobab Nigeria highlights the potential for private capital in Africa. As the continent continues to lag behind other developing markets like Asia, where exits exceeded $65 billion, the need for patient capital to drive both financial and impactful returns becomes increasingly important.

uMunthu stated, "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." The acquisition serves as a beacon of hope for the region, demonstrating the viability of investing in Africa and the potential for successful exits.

In conclusion, Baobab's acquisition of its Nigerian subsidiary marks a significant milestone for uMunthu Fund and the African private capital landscape. As the continent continues to evolve, the need for patient capital and successful exits will play a crucial role in driving growth and development in the region.