Brookhouse International School in Nairobi has secured a Sh612 million ($7 million) funding from the International Finance Corporation (IFC), which will finance construction of a new campus expected to double the high-end learning institution’s student capacity.
IFC, which is the World Bank’s private sector lending arm, says in a disclosure note seen by the Business Daily that the loan will provide only about half of the Sh1.22 billion that Brookhouse requires to see through an expansion projected to raise its student capacity from the current 700 to about 1,500.
“The proposed project consists of an expansion through the construction of a second campus in Nairobi which will accommodate another 800 students. This expansion will be executed in two phases,” said the IFC statement.
Brookhouse is majority owned by a consortium of investors, led by AfricInvest Fund, who control a 75 per cent stake. Piyush Mehta and family own the other 25 per cent shares.
Prior to AfricInvest-led equity buyout of Brookhouse in 2010, the Mehta family was the sole owner of the school that was founded in 1981. IFC is an indirect shareholder of Brookhouse through its 14 per cent stake in AfricInvest.
Brookhouse School’s management had not responded to our queries by the time of going to press.
The expansion is expected to create 140 permanent jobs. IFC’s funding is likely to make it easier for Brookhouse to raise additional cash by piggy-backing on the lender’s name.
The IFC said Brookhouse’s long-term plans are to expand beyond Kenyan borders.
“Brookhouse’s management has a long-term vision for regional expansion into neighbouring East African countries, which would lead to the transfer of skills from the more developed Kenyan education sector to less developed markets, thereby improving standards and stimulating competition,” said the disclosure note.
Kenya’s population is estimated to be growing at the rate of one million people a year, while an expanding middle class makes education sustainable business that is attracting private investments especially for schools serving the high-end of the market.
Hillcrest International Schools, owned by private equity fund Fanisi Capital, has also announced a Sh2 billion expansion plan. The school is selling 17.9 acres of land that it owns in Karen to raise funds for the expansion. Realtors said that the school would likely get around Sh350 million on the land.
GEMS Cambridge International School, which opened a Nairobi campus last September, is a Sh3 billion venture.
Delloite’s East Africa Private Equity Confidence Survey 2011 released last year said that the education sector, similar to the health industry, is benefiting private sector investors due to gaps created by government neglect.
Deloitte argued that since the ability to pay is the only factor stopping consumers from switching from public to private institutions, there is room to offer different packages for different income brackets.
“As soon as people can afford to, they move to private healthcare and private education — a potentially enormous market, especially when companies manage to tailor services and products to lower-income demographics. The upper middle-class are guaranteed clients,” said the report.
The report, however, said that funds going to the education sector were trickling in unlike health where they come in floods.
Survey respondents said that in the short-term most private equity funds would put their money in finance, agriculture, and finance sectors over education.
The survey also found that 14 per cent of respondents said the finance sector deserved more focus over the next 12 to 18 months, followed by the agriculture sector (13 per cent ), while education attracted four per cent of the respondents.