The International Finance Corporation (IFC) has backed a Sh5 billion ($60 million) expansion plan by low-cost schools group Bridge International Academies through an intended equity investment of Sh850 million ($10 million).
IFC, the World Bank’s private investment arm, has published disclosures indicating that it expects to provide the capital injection that will see Bridge International expand its presence to three African countries and increase the number of schools in Kenya.
According to the IFC documents, the group currently runs 211 low-cost schools in low income areas in Kenya, with over 57,000 pupils.
“The total project cost is estimated at $60 million (Sh5.1 billion). The proposed IFC investment is a $10 million preferred equity investment...The investment will be used to increase the number of schools in Kenya and expand to three new countries,” said IFC in a disclosure note.
Bridge International was established in 2009 by co-founders Jay Kimmelman and Shannon May, utilising a mass market-low cost approach that sees the schools offer kindergarten and primary education at approximately Sh500 ($5) per month.
It established its first school at Mukuru slums in Nairobi in January 2009, and by the end of the year had enrolled 299 pupils of up to class three, with a market expansion plan targeting rapid construction of schools to leverage on pupil numbers.
In 2010, it opened eight more schools, with 1,341 pupils.
The number of schools rose to 37 in 2011 in various parts of the country with student enrolment increasing to 4,887 pupils. 47 new academies were opened in 2012.
Bridge International Academies chief executive Jay Kimmelman could not be reached for comment as he did not respond to our calls by the time of going to press.
The IFC disclosure note did not mention the options that the school will use to raise the total expansion budget.
The school, according to the disclosures, is 21 per cent owned by its co-founders and former employees, with institutional investors including venture capital firms New Enterprise Associates, Khosla Ventures, Omidyar Network and Learn Capital jointly owning approximately 63 per cent of the company.
According to IFC, Bridge International is expected to leverage on the lender’s reach for analysis, selection and entry into the new markets, as well as access to long term capital.
“IFC together with the World Bank can assist the company in understanding and navigating regulations and government policies in new markets,” said IFC in the disclosure documents.
According to the school, it plans to have enrolled at least 3.5 million pupils by 2020, rising to 10 million by 2023.
“ Ten years from now we plan to be the global leader in providing education to families who live on $2 a day per person or less. We will be operating in at least a dozen countries, and have 10 million pupils coming to class every day,” says Bridge International on its website.
The investment plan by IFC comes months after another funds injection into an educational institution.
At the beginning of the year, Brookhouse International School in Nairobi secured a Sh612 million ($7 million) loan from IFC towards financing the construction of a new campus expected to double the high-end learning institution’s student capacity.
IFC in the disclosure note on the loan deal said it would provide only about half of the Sh1.22 billion earmarked by Brookhouse to see through the project, which will eventually see the school raise its student capacity from the current 700 to about 1,500.
IFC is an indirect shareholder in Brookhouse School through its 14 per cent holding in AfricInvest Fund, which leads a consortium of investors that control a 75 per cent stake of the school.
The lender has recently stepped up investment in Kenyan companies with renewed focus on small and medium enterprises (SMEs), the financial sector, agribusiness and infrastructure sectors.