MKU places Sh280m fire-sale bid for Inoorero tower

Mount Kenya University (MKU) has placed a fire-sale bid to buy rival Inoorero University’s eight-storey campus building, which a creditor put up for auction on Monday.

People familiar with the matter said MKU has offered to pay Sh280 million for the building that sits on a 0.09 hectare parcel of land in Nairobi’s Parklands area against a price of Sh380 million set by its present owners.

The creditor said in a public notice that it would auction the property belonging to Inoorero, now known as International University of Professional Studies (IUPS), on August 15 citing IUPS’ failure to service a multi-million-shilling loan it took from a bank about five years ago.

Owners of IUPS on Wednesday confirmed that MKU had offered to buy the building but maintained that the matter was in the early stages of discussion.

“There is an offer for a purchase but let’s not get into that because it’s too early to do so. Matters are still fluid and I may not have something concrete to say at this stage,” Francis Nyammo, the proprietor and chancellor of the college, said.

MKU officials confirmed that they had placed a fire-sale bid for the campus property, saying the acquisition would support the institution’s ongoing expansion strategy.

“We have made a formal bid for a possible purchase of the building and hope to close the transaction soon,” said Simon Gicharu, the MKU founder and chairman,

The two institutions are hoping to seal the deal ahead of the auction date to avoid disruption of learning programmes.

Mr Nyammo also revealed that the sale deal would include a clause allowing current students to continue their studies to completion.

“No student will be sent away despite the sale plan. They will be allowed to go the full stretch in their studies and graduate,” Mr Nyammo said but declined to provide details on how that will be done.

READ: Inoorero university’s prime building set for auction

Mr Gicharu also declined to discuss the fate of students currently enrolled with IUPS.

“We have not reached a point of discussing whether we will absorb the students. Our present engagement is mainly on the intended acquisition of the building and it is our hope that other matters will come up for discussion once the takeover is complete,” he said.

The Commission for University Education (CUE) Wednesday said it had not been formally briefed on the intended sale of the IUPS campus building but promised to safeguard the interests of students.

“We have not received any formal communication from International University of Professional Studies but when it comes we shall demand clarification on the fate of continuing students because that would be within our mandate as a commission. The rest of the issues such as the sale plans are personal to them,” Henry Thairu, the CUE chairman, said.

Mr Nyammo Wednesday maintained that IUPS would meet its obligations to the creditors to avoid the looming auction.

“We will settle the matter and overcome the challenge,” he said even as he declined disclose how much money the university owes or even the identity of the creditor.

IUPS in September 2009 secured a long-term debt of Sh320 million from a local development finance institution and raised Sh180 million from individual and corporate investors through private placement but it is not clear what portion of the debt it had cleared.

Insiders said the university has over the years operated a huge overdraft, leading to its present financial predicament that began with a dip in student enrolment four years ago despite a growing demand for higher education.

The institution initially operated as Kenya School of Professional Studies (KSPS) until 2009 when it was granted an interim letter of authority to run as a private university.

It then adopted the name Inoorero University on October 15, 2009 but later rebranded to IUPS in November 2013 to boost its identity amid intense competition from rivals.

IUPS recorded a sharp dip in enrolment between 2009 and 2013 — a trend some critics attributed to the adoption of the vernacular name Inoorero which put off many potential students.

The university offers degree courses in commerce, procurement, information and communication technology, information science, management and office administration.

Mr Gicharu said MKU would offer web-based learning programmes at the campus if the purchase plans succeed.

“After the acquisition, we intend to rename the premise MKU Institute of Virtual Learning,” he said.

MKU presently has 12 campuses in Nairobi, Thika, Mombasa, Meru, Nakuru, Mumias, Eldoret, Kitale, Lodwar, Kakamega and Kabarnet. It also has a campus in Kigali, Rwanda and a marketing office in Juba, South Sudan.

Successful purchase of the property would help MKU grow its presence within Nairobi where universities have been waging a protracted battle for dominance in the past seven years.

Universities have spent billions of shillings to buy or rent prime buildings in the city and other major towns as they compete to attract working students for evening classes.

Both public and private universities are estimated to have spent more than Sh5 billion in buying buildings and parking areas in downtown Nairobi alone.

At least nine institutions – including the University of Nairobi, Kenya Methodist University, Jomo Kenyatta University of Agriculture and Technology, Kenyatta University, Moi University and the Presbyterian University of East Africa – have set up bases in central Nairobi and the suburbs in the past five years.

According to the Economic Survey 2014 the overall university student enrolment grew by 34.9 per cent to 324,560 in the academic year 2013/14 from 240,551 the previous year.

This number is expected to swell substantially in the coming years as more students go through secondary and primary school buoyed by education subsidies.