Alitheia Capital and Goodwell Investments Successfully Exit Baobab Nigeria

Alitheia Capital and Goodwell Investments have formally exited Baobab Nigeria after 12 years of investment, representing the first exit from their uMunthu Fund. This successful partnership has led to the substantial growth of Baobab, transforming it into a prominent microfinance institution in Nigeria. The exit marks a new chapter for Baobab, which is now solely owned by Baobab Group while the investors prepare for further fundraising efforts.

Alitheia Capital and Goodwell Investments have successfully exited from Baobab Nigeria, marking a significant milestone as the first exit for their joint uMunthu Fund. This exit follows over 12 years of investment, beginning with the GWAMDC fund and later transitioning to the uMunthu Fund. The investment companies highlighted that this exit reflects Baobab Nigeria’s substantial growth and financial stability, showcasing the effectiveness of patient capital in achieving both financial returns and social impact.

The decision to invest in Baobab (formerly MicroCred) in 2012 stemmed from a mutual vision focused on financial inclusion. Their continued support through the uMunthu Fund in 2015 represented a pioneering effort as private capital entered the financial sector in northern Nigeria, which had been primarily dominated by development finance institutions (DFIs). Moreover, they became the first local investors to bring Nigerian representation to Baobab’s board.

Under the guidance of Alitheia and Goodwell, Baobab Nigeria transformed from a single-unit microfinance institution into a leading national microfinance entity. Their involvement included providing essential governance support, financial structuring insights, and access to significant local networks. Alitheia’s Managing Partner, Tokunboh Ishmael, remarked on this transformation, emphasizing the impressive journey Baobab has undertaken.

When the investment commenced, approximately 70% of Nigeria’s population lacked access to financial services, particularly in northern regions. By 2023, governmental data indicated that financial exclusion had decreased to 26% nationwide. Since their initial investment, Baobab has expanded its reach significantly, serving twelve times more customers through 7.6 times more branches, and increasing staff by 3.2 times, all while maintaining small average loan and deposit sizes.

The exit signifies a new chapter for Baobab Nigeria, as it is now fully owned by its international parent company, Baobab Group, which aims to further develop its impact within Nigeria. Anticipating additional exits in 2025, Alitheia and Goodwell are currently entering the final fundraising phase for their uMunthu II Fund, seeking investors interested in replicating Baobab Nigeria’s success and social impact.

In conclusion, Alitheia Capital and Goodwell Investments’ exit from Baobab Nigeria exemplifies the effective strategy of patient capital, resulting in significant growth and social impact. Their involvement underscored the importance of financial inclusion in northern Nigeria, which has made notable progress since their initial investment. Moving forward, the full ownership of Baobab by its parent company signals a continued commitment to expanding its mission in the country, while Alitheia and Goodwell position themselves for future investments through their new fund.

Original Source: nairametrics.com