Politician Kenneth Matiba has lost his 37-year grip on Hillcrest International Schools in a sale deal that marks the exit of one of Kenya’s pioneer investors from the education sector.
The premium schools chain is now in the hands of a group of investors led by two self-made IT millionaires, Ayisi Makatiani and Anthony Wahome.
The sale marks the painful end to Mr Matiba’s financial struggles to maintain an empire of schools and hotels – from where be built a multi-million fortune when in his early forties.
Mr Matiba’s schools, purchased in 1974, were snapped in a multi-million shilling deal by a consortium of Fanisi Venture led by 44-year-old IT guru Makatiani and Wahome.
Mr Wahome, also in his 40s, is the CEO of Linksoft Telecom Networks, which has been building base stations for telecom firms in the region.
Mr Makatiani is best known as the entrepreneur who together with two other Kenyans — Karanja Gakio and Amolo Ng’weno — founded Africa Online in 1994 in Cambridge US where they were studying. Less than two years later the founding members sold the company to Prodigy Inc, a US firm, through a share swap. Africa Online is today owned by Telkom South Africa.
It will be interesting to see how Hillcrest Schools will change with the entry into the education sector of this Massachusetts Institute of Technology (MIT) graduate in Electrical and Electronics Engineering, and his partner, Mr Wahome.
The sale followed last month’s out-of-court settlement that saw Matiba’s family agree to stop any further hold on the schools and shows how far Mr Matiba’s fallout with Moi continues to drain his empire.
Mr Matiba suffered a severe stroke after he was detained by the then President Moi for spearheading the campaign for the return of multi-party politics in the early 1990s. The detention and the prolonged illness left him with little control of his businesses as debts spiralled out of control.
The schools were placed under in 2005 over a Sh 620 million debt owed to Barclays Bank but the sale of the schools to Braeburn Ltd was delayed after the Matiba family filed a court case to re-secure the assets.
On Tuesday, the new owners released a statement promising to build an Eton in Africa – which was also Matiba’s pet dream: a place where he could educate his young children.
“With this acquisition, we wish to confirm that we are setting off on a grand journey to transform Hillcrest International Schools into world class educational institutions in what we hope will soon be a showcase impact investment project,” Makatiani said in a statement.
Before it was put on receivership over a debt of Sh 600 million owed to Barclays Bank, the Hillcrest Schools were part of a large empire that included the Alliance Group of Hotels, which have also been closed.
Besides Fanisi Venture Capital Fund- whose shareholders include the Norwegian Fund for Developing Countries (Norfund), Finnish Fund for Industrial Cooperation (Finnfund), Proparco (the private sector arm of Agence Française de Développement – AFD) and the World Bank Group’s private sector arm, the International Finance Corporation (IFC) – the others were identified as Mr. Wahome and Rose of Sharon Academy Ltd, a premier 8-4-4 provider.
“This acquisition will remain seamless and has been structured to ensure normal continuity in all academic and management plans relating to Hillcrest International Schools as the only current change is the shareholder profile.”
Situated in Nairobi’s Karen suburb, Hillcrest International Schools is a leading British Curriculum co-educational international school, and has a student population totalling over 600 students with a consolidated turn-over of Sh 600 million per year.
The loss of Hillcrest Schools now leave the Matiba family holding only to the Alliance Group of Hotels whose fate is also not clear. Three Hotels under the group – Jadini, African and Safri Beach – have remained closed for the better part of the year leaving Naromoru River Lodge as the only Alliance hotel in business.
Matiba last year also lost control of Carbacid, a Carbon dioxide manufacturer, where he sold his 22 per cent shareholding to a private equity firm, Centum Investment for Sh418 million.
In a recent interview with the Business Daily Matiba’s eldest son, Raymond said they were trying to work out a solution to the debt portfolio and that the matter was at a crucial stage that required confidentiality.
Another of Matiba’s venture, Kalamka Ltd which owned the People Daily, was acquired by Mediamax Ltd, a company linked to the Kenyatta family last year. Mediamax also acquired assets of Rose Kimotho’s Kameme FM and K-24 television station. The sale of Hillcrest marks the end of Matiba’s 1974 dream of owning a series of hotels and schools in Kenya – after he gave up the idea of property development – his first salvo in business.
Matiba’s fortunes nosedived after he fell out with President Moi and resigned as a Cabinet minister in a political tussle that saw the former Kiharu MP detained. Also his business partner and key manager Stephen Smith left Kenya leaving the businesses under the care of Matiba family and under pressure from the excesses of Kanu regime. But it his business empire that suffered as a result as ill health saw him unable to concentrate on rebuilding his fortunes and was unable to recapture his Kiharu 2007 general elections. He polled 8,000 votes in the Presidential bid.
But it was the departure of his long term partner, Stephen Smith, who sold his interests in the Alliance Group to Matiba, that also affected the running of the Alliance Group Hotels, now run by Matiba’s eldest son, Raymond.
Hillcrest problems arose out of a debt advanced to Matiba in December 2000. The bank had initially put a demand of Sh 544 million but reduced it to Sh 360 million after the appointment of the receiver manager.