UK fund closes Sh3.6bn buyout of Brookhouse

The owners of Brookhouse School have sold the institution to Educas, a United Kingdom-based private equity fund, for Sh3.6 billion, making it one of the biggest transactions in Kenya’s high-end education sector.

Among those who sold their interest are the school’s founder Piyush Mehta, who held a 25 per cent stake in the institution, and Victoria Bank, whose stake stood at 20 per cent.

Others include PE firm AfricInvest, which held the single largest interest of 30 per cent in the institution that offers the British curriculum to learners from rich and upper middle class households.

AfricInvest was part of a consortium of investors that acquired a combined 75 per cent stake in Brookhouse from the Mehta family in 2010.

The deal underlines the lucrative returns earned by PE funds in Kenya, with AfricInvest more than tripling its five-year investment in the institution.

“AfricInvest is pleased to announce that its AfricInvest Fund II, along with other shareholders, has successfully concluded its exit from Brookhouse Schools to UK-based Educas LLC in August 2015,” reads part of a statement announcing the transaction.

AfricInvest received Sh1 billion in the buyout, a return of 212 per cent on the Sh346.1 million it paid for a 30 per cent stake in 2010.

The PE firm did not disclose its original investment but the Business Daily established the figure from a review of AfricInvest’s investment in Brookhouse by Canada-based asset manager Sarona Fund.

The Mehta family is expected to have made the highest return, receiving Sh900 million in the latest buyout, which has completed its exit from the school it founded in 1981.

Victoria Bank, which is associated with the family of managing director Yogesh Pattni, received Sh720 million in the deal. The buyout signals increased investor interest in Kenya’s high-end private education business where the last major transaction was the 2011 takeover of Hillcrest International Schools by PE firm Fanisi Capital for an undisclosed amount.

READ: End of Matiba family empire as Hillcrest goes on sale

Beirut-based family business Sabis has also announced plans to enter the local private education business in the near term through a partnership with Dubai-based asset manager Investbridge and Nairobi Securities Exchange-listed investment firm Centum.

For Educas, the acquisition of Brookhouse is part of its global expansion after the fund was established in 2013 by Nadim Nsouli who received backing from institutional investors including London-based PE firm Oakley Capital, which has €750 million (Sh87 billion) under management.

Educas also recently acquired an undisclosed stake in Bogota-based Colegio San Mateo, a private school in Colombia.

The Brookhouse purchase brings the PE group’s total number of schools to six, including Reddam House (South Africa), Bearwood College (UK) and a chain of early learning schools in Australia.

Brookhouse made a net profit of Sh121.8 million in 2012, a 61.3 per cent increase compared to the net profit of Sh75.5 million the year before, according to the latest available disclosures by Victoria Bank.

It is one of the leading private schools in East Africa, providing British national curriculum co-educational day and boarding programmes to learners aged two to 19.

Based in the Karen suburb, the school has about 800 students of various nationalities, in line with the multicultural character of the schools.

Brookhouse charges fees ranging from Sh220,000 to Sh910,000 for each of the three terms depending on the grade and whether a student is boarding or not.

This places annual fees for those in year two or higher above Sh1.3 million, making the school a preserve of high-net-worth households.

Brookhouse and its peers have benefited from the growing ranks of the rich and upper middle class who can afford the fees.

They include businessmen, politicians, top professionals and expatriates working for multinationals, foreign governments and global institutions like the United Nations.

A significant number of Kenyan politicians, for instance, take their children to the Molo-based St Andrew’s Turi.

Mr Sammy Onyango, the CEO of Deloitte East Africa, and Nelson Kuria (former CIC Insurance CEO), are some of the executives who have taken their children through the international schools.

The high-net-worth families prefer private schools offering international certifications such as the General Certificate of Education (GCE).

Besides Brookhouse, other international schools in Kenya include the German School, International School of Kenya, Braeburn, Rosslyn Academy and Kenton.

Their main attraction, their proponents say, is that they offer students world-class education, preparing them for admissions into universities in the US and Europe. Their multicultural student populations also prepare students for careers in a globalised world.

Learners in international schools enjoy low student-to-teacher ratios, large libraries, theatre halls, swimming pools and foreign trips.

A typical class has only 15 students or a third of the student population in most public schools.

The schools regularly communicate with parents, informing them of all scheduled activities and meal plans.

They arrange for local and regional safaris and trips to American and European capitals as regular activities on their academic calendars, setting the stage for more culturally aware and sophisticated globetrotters.

Parents whose children study in these schools say their key selling point is the fact that they prepare students for entry into universities from which they later launch their bid for lucrative careers in any part of the world.

Mr Kuria, for instance, booked his son at Brookhouse for six months, a move that paved the way for his admission to a university in the UK.