Alitheia Capital and Goodwell Investments have exited Baobab Nigeria after 12 years, marking the inaugural exit from their uMunthu Fund. This exit celebrates the growth and financial stability of Baobab, emphasizing patient capital’s role in financial inclusion. They intend to enter the final fundraising phase for their uMunthu II Fund to replicate their success.
Alitheia Capital and Goodwell Investments have successfully exited their investment in Baobab Nigeria, signaling a significant milestone as the first exit from their joint uMunthu Fund. This accomplishment comes after over 12 years of investment, which began with the GWAMDC fund before transitioning to the uMunthu Fund. The exit not only underscores the remarkable financial stability and growth Baobab Nigeria has achieved but also highlights the efficacy of patient capital in generating both financial returns and considerable social impact.
The initial investment made by Alitheia and Goodwell in Baobab (formerly MicroCred) in 2012 stemmed from a mutual objective of enhancing financial inclusion. Their continued support through the uMunthu Fund starting in 2015 marked a pivotal moment as the first instance of private capital investment in northern Nigeria’s financial sector, which had traditionally been dominated by development finance institutions. As the first local investors, they facilitated Nigerian representation on Baobab’s board for the first time, influencing crucial decisions for the institution’s future.
Under the guidance of Alitheia and Goodwell, Baobab Nigeria transformed from a modest microfinance institution into one of Nigeria’s leading national microfinance banks. Their investment strategy included providing substantial governance support, financial structuring advice, and vital access to local networks, contributing significantly to the institution’s evolution.
Reflecting on this transformative journey, Alitheia’s Managing Partner, Tokunboh Ishmael, affirmed, “This was a bank that was operating out of a single room in northern Nigeria when we invested, and today it is a top-three nationally licensed microfinance bank. We’ve walked a journey of leadership, governance, and financial and impactful growth. We’re proud of what’s been achieved together and look forward to seeing where the future will take Baobab Nigeria.”
Initially, an estimated 70% of Nigeria’s populace faced barriers to accessing financial services, particularly in northern regions. However, by 2023, data indicated that financial exclusion had decreased to 26% nationwide. The investment in Baobab has allowed the institution to significantly expand its reach, servicing 12 times more clients through an increase of 7.6 times in bank branches and a 3.2 times growth in staff, while maintaining smaller average loan and deposit sizes to cater to underserved populations. During this period, Baobab’s balance sheet increased 37 times, with its loan book expanding by 43.5 times. The financial value of the uMunthu investment tripled during the holding period, indicative of the potential of patient capital.
The exit of Alitheia and Goodwell signifies the beginning of a new chapter for Baobab Nigeria, which is now wholly owned by its parent company, Baobab Group. This transition aims to preserve and broaden the company’s impact within Nigeria. Looking ahead, Alitheia and Goodwell are entering the final fundraising stage for their uMunthu II Fund, targeting investors who are keen to replicate the success and impactful model established by Baobab Nigeria.
Alitheia Capital and Goodwell Investments have completed a significant exit from Baobab Nigeria after 12 years, highlighting their commitment to advancing financial inclusion through patient capital. Their investment has transformed Baobab Nigeria into a leading microfinance institution, achieving substantial growth and reach. With the transition to Baobab Group ownership, the company is poised for further impact, as Alitheia and Goodwell prepare to engage new investors for their uMunthu II Fund.
Original Source: nairametrics.com
