Egyptian financial services company Beltone just bought Baobab Group for €197.6M ($213M), acquiring a 20-year-old microfinance institution operating across 7 African countries. Baobab serves 1.6M customers with a €848.8M loan book and claims 50% digital loan disbursement. But here’s the question nobody’s asking: If Baobab is so valuable with 20 years of operations and nearly €1B in assets, why are PE investors (Apis Partners) exiting now, and what does a €197M valuation actually mean for African microfinance?
The Numbers:
The Deal: — Acquisition price: €197.6M ($213M at current exchange rates) — Acquirer: Beltone Holding (Egypt) via subsidiary Beltone Capital — Target: Baobab Group (100% acquisition) — Sellers: Apis Partners (UK private equity) + other shareholders (names not disclosed) — Deal announced: February 11, 2025 — Deal closed: February 2026 (regulatory approvals obtained)
Baobab’s Operations (Q3 2025): — Active customers: 1.6M — Loan book: €848.8M ($916M) — Markets: 7 (Senegal, Côte d’Ivoire, Madagascar, Burkina Faso, Mali, DRC, Nigeria) — Digital loans: 50% of disbursements — Age: 20+ years in operation — Cumulative: 4M loans, €9.2B disbursed lifetime — Focus: Micro and small business finance
Valuation math: €197.6M for €848.8M loan book = 0.23x book value
This is either: a) Baobab’s loan book is impaired (high NPLs) b) Standard microfinance valuation (low profitability) c) Sellers desperate to exit d) Emerging market discount
Comparison – How Other African Microfinance Exits Performed:
FINCA Impact Finance (similar profile): — Founded 1984, operates 20 countries — 2.1M customers, $1.2B loan book — Never successfully exited – still owned by FINCA International (nonprofit) — Tried multiple times to raise capital, struggled
Advans Group (French microfinance): — Operates 9 African countries — Backed by development finance institutions — No major exit – still held by DFIs — Profitable but low returns (3-5% ROI)
African Banking Corporation (ABC Holdings): — Zimbabwe-based, pan-African banking — Acquired by Atlas Mara for $265M (2014) — Atlas Mara collapsed, sold for parts — Lesson: Pan-African banking hard to execute
Key comparisons: Most African microfinance exits are: — To development finance institutions (IFC, Proparco, FMO) — At low multiples (0.2-0.5x book value) — After long hold periods (10+ years) — With limited returns for investors
What makes Baobab different: — Actually got an exit (rare) — Commercial buyer (Beltone, not DFI) — Full acquisition, not minority stake — But: 0.23x book value = sellers took huge haircut
Apis Partners context: Apis Partners is UK private equity focusing on emerging market financial services. They invested in Baobab years ago (exact date not disclosed, likely 2015-2018). If they invested at €100M-150M valuation and exited at €197M, that’s: — Maybe 1.3-2x return over 7-10 years — IRR: 4-10% (terrible for PE, worse than index funds) — Why exit now? Probably: can’t raise valuation higher, fund lifecycle ending, need to return capital to LPs
Business Model Reality – What Beltone Actually Bought:
The microfinance economics problem:
Baobab’s €848.8M loan book serving 1.6M customers = €531 average loan size. Small loans, high operational costs.
Typical microfinance math: — Interest charged: 25-40% annually (Africa average) — Cost of capital: 8-15% (debt from DFIs) — Operating costs: 15-25% of loan book (staff, branches, collections) — Default losses: 5-15% (provision for loan losses)
If Baobab charges 30% interest: — Revenue: €848.8M x 30% = €254.6M annually — Cost of capital: €848.8M x 10% = €84.9M — Operating costs: €848.8M x 20% = €169.8M — Net before defaults: Zero — After 10% defaults (€84.9M): Losing money
This explains 0.23x valuation. Microfinance institutions barely make money at scale.
Why Beltone bought it:
Beltone is Egyptian financial services (investment banking, asset management, consumer finance). Egypt is their home market – saturated, high competition. Beltone needs geographic diversification.
What Beltone sees: — Platform: Baobab has 7-country infrastructure already built (licenses, branches, staff, systems) — Building this from scratch would cost €500M+ and take 10 years — For €197M, Beltone gets instant presence in West + Central Africa — Cross-sell opportunity: Beltone can offer insurance, investment products, digital payments to Baobab’s 1.6M customers — Data play: 4M loans, €9.2B disbursed = massive credit data. Beltone can build better scoring models, reduce defaults
The 50% digital loans claim:
Article says 50% of loans disbursed digitally. This sounds impressive but: — “Digital disbursement” often means: apply on app, money sent to mobile wallet — Collection still manual (agents visiting businesses, phone calls) — Credit decisioning “automated” but relies on basic scoring (mobile money history, social connections) — True digital lending (instant approval, zero human touch): probably <10% of portfolio
If Baobab was truly 50% digital with automated decisioning, defaults would be 3-5% (like M-Shwari). If defaults are 10-15%, “digital” is mostly marketing.
The 7-country footprint problem:
Operating in Senegal, Côte d’Ivoire, Madagascar, Burkina Faso, Mali, DRC, Nigeria = 7 different: — Regulators (each with different licensing requirements) — Currencies (5+ currencies: XOF, MGA, CDF, NGN) — Languages (French, English, Malagasy, Lingala, plus local languages) — Political risks (Mali/Burkina coups, DRC instability)
Complexity costs money. Each country requires local CEO, compliance team, government relationships. Baobab’s operating costs likely 20-25% of loan book because of this.
Risk – Why This Could Fail:
Integration execution risk:
Beltone is Egyptian. Baobab operates mostly francophone West/Central Africa. Cultural mismatch: — Egyptian management trying to run Senegalese/Ivorian operations — Language barriers (Arabic/English vs French) — Different business cultures (Egyptian aggressive sales vs West African relationship-driven)
If Beltone tries to impose Egyptian playbook on Baobab’s markets, local teams quit, customers churn, regulators resist.
Portfolio quality risk – the hidden NPLs:
0.23x book value screams: “These assets aren’t worth face value.”
If Baobab’s €848.8M loan book has 15-20% NPLs (non-performing loans), real value is: — €848.8M – (€127M-€170M impairment) = €678M-€721M — €197M for €700M = 0.28x, still low but more reasonable
Post-acquisition, Beltone discovers actual NPLs higher than disclosed. Needs to write down €100M+. €197M purchase price becomes €100M actual value.
Regulatory risk – the fragmented nightmare:
7 countries = 7 central banks that can: — Change microfinance regulations overnight — Cap interest rates (Kenya did this, killed profitability) — Freeze operations (Nigeria CBK loves doing this) — Impose new capital requirements
Mali and Burkina Faso have ongoing coups and military governments. DRC is perpetually unstable. If Baobab loses license in 2-3 countries, 30-40% of loan book vanishes.
Currency risk:
Baobab’s loan book in multiple currencies. If: — CDF (Congo) devalues 30% (common in DRC) — Beltone reports in USD/EUR — Loan book shrinks by €50M+ overnight
Currency hedging costs money. Microfinance margins too thin to afford comprehensive hedging.
Competition intensifying:
Digital lenders are crushing traditional microfinance: — M-Pesa, Mobile money lenders offering instant loans — Fintech startups (Branch, Tala, Carbon) with better UX — Banks launching digital SME lending (cheaper capital costs)
If Baobab’s “50% digital” isn’t actually competitive with true fintech, customers switch. Loan book shrinks 10-20% annually.
The Beltone track record question:
This is Beltone’s “first cross-border acquisition and largest transaction.” That means: — No experience doing cross-border M&A — No experience managing pan-African operations — Learning on a €197M bet
If Beltone messes up integration, they’ve overpaid for a melting ice cube.
Prediction – How To Track If This Works:
By August 2026 (6 months post-acquisition): — If Beltone announces loan book grew to €900M+, integration working — If loan book shrinks to €750M or below, losing customers/NPLs discovered — Track staff turnover: If Baobab’s country CEOs quit, integration failed — Watch for regulatory issues: If any of the 7 countries suspend/restrict Baobab operations, red flag
By February 2027 (12 months): — If Beltone reports Baobab contribution: €20M+ profit, deal justified — If breakeven or losing money, overpaid — If launched 2+ new products (insurance, payments, digital savings) to Baobab customers, cross-sell working — If still just doing microloans, no synergy realized
By February 2028 (24 months): — Success: Loan book €1.2B+, profitable with 8-10% ROE, expanded to 2 new countries, digital loans 70%+, Beltone announces second acquisition using Baobab as platform — Partial success: Loan book €900M-€1B, breakeven, stable operations but no major growth, digital loans 60% — Failure: Loan book <€700M, losing money, exited 2+ countries due to regulation/instability, Beltone tries to sell Baobab or takes impairment charge
What actually determines success:
- NPL rate: If <8%, model works. If 12-15%, struggling. If >20%, disaster.
- Digital transformation: If truly automated lending with instant approvals scales to 70%+ of portfolio with 5% defaults, Baobab becomes valuable fintech. If stuck at 50% fake-digital, stays traditional low-margin MFI.
- Cross-sell: If 30%+ of Baobab customers buy insurance/savings/payments products from Beltone, platform value unlocked. If <10%, just bought expensive loan book.
- Regulatory stability: If all 7 countries keep licenses with no major restrictions, manageable. If 2+ countries impose caps/restrictions, model breaks.
- Exit opportunity: Can Beltone eventually flip this for €300M+? Or stuck holding €200M asset that generates 3% returns?
Honest assessment:
€197M for 1.6M customers in 7 African markets = €123 per customer. That’s: — Cheaper than acquiring customers organically (€200-300 CAC for financial services) — More expensive than customers are worth if churn is high
The 0.23x book value tells the real story: Either Baobab’s assets are impaired, or microfinance just doesn’t generate good returns. Probably both.
For Beltone: This is geographic expansion play. If they can stabilize Baobab at breakeven while using it as platform for higher-margin products (insurance, wealth management, payments), deal works. If they just run it as traditional MFI, they’ve bought a low-return headache.
For African microfinance: The fact that Apis Partners (sophisticated PE firm) exited at ~0.23x book after years of trying to scale Baobab tells you everything about the economics. Microfinance sounds good (helping small businesses!), but the unit economics are brutal. High costs + high defaults + low customer willingness to pay = structural unprofitability.
Benchmark to watch: If Beltone can get Baobab to 12% ROE by 2028, they’ve succeeded where others failed. If still at 3-5% ROE or losing money, African microfinance remains a development impact story, not a commercial opportunity.
