End of Matiba family empire as Hillcrest goes on sale

The prestigious Hillcrest Group of Schools owned by politician Kenneth Matiba is up for sale, signalling a possible end to one of independent Kenya’s largest family-owned business empires.

Barclays Bank of Kenya — the creditor who put the politician-cum-businessman’s schools under receivership in 2005 over a Sh620 million debt — last week advertised the schools for sale after an out-of-court settlement was agreed upon by the two parties.
The schools have a consolidated turn-over of Sh600 million.

Last Friday, the two parties were at the Milimani Court hoping to register consent outside the courts, but the matter was pushed to this week because the consent papers had not been filed.

Mr Gichuki King’ara, the Hillcrest lawyer, Monday said the sale was part of the settlement that the Matiba family had agreed to with Barclays Bank to recover the debt.

Loss of the Hillcrest Schools will see the Matiba business empire significantly shrink once again, having lost control of carbon dioxide manufacturer Carbacid after he sold his 22 per cent stake to a private equity firm, Centum Investment, for Sh418 million.

Barclays had in 2001 unsuccessfully tried to sell Mr Matiba’s five-star hotels that included Jadini, Africana and Safari Beach over a Sh1.8 billion debt, but the process stopped after the family lodged an appeal with Barclays Plc – the mother company of Barclays Kenya Limited even as the matter turned political. Mr Matiba also owns the Naromoru River Lodge. All the prestigious hotels, apart from Naromoru, have been closed and their websites shutdown. Another of Mr Matiba’s venture, Kalamka Ltd, which owned the People Daily, was last year acquired by Mediamax Ltd, a company linked to the Kenyatta family. Mediamax also acquired the assets of Ms Rose Kimotho’s Kameme FM and K-24 television station.

The sale of Hillcrest marks the end of Mr Matiba’s 1974 dream of owning a series of hotels and schools in Kenya — after he gave up the idea of becoming a property mogul — his first salvo in business.

The former Cabinet minister, who has since faded from public limelight as a result of ill health, established Hillcrest Secondary School in 1974, the same year he snapped another fortune, the Naro Moru River Lodge.

In 1978, he built Africana Sea Lodge in a record six months, making him one of the youngest African millionaires at 46.

Together with his then business partner Stephen Smith, Mr Matiba, while doubling as chairman of East African Breweries, for years built his multi-million shilling fortune around the Hillcrest Schools and four prestigious hotels.

The empire, which was principally managed by Mr Smith, Mr Matiba’s son Raymond, and a known hotel industry prodigy, Mr Christopher Modigell, run smoothly and profitably.

As beach tourism boomed in the late 70s and mid-80s, the fortunes of Mr Matiba — who in 1979 won the Mbiri parliamentary seat from Dr Julius Gikonyo Kiano — increased.

His entry into politics buoyed his image in both business and politics, opening new avenues for him to expand both the hotels and the schools, and acquiring interests in a number of blue-chip companies.

Built on a 52-acre plot in the exclusive Karen suburb of Nairobi, Hillcrest has been offering the British education curriculum and was part of Mr Matiba’s education empire that also included Westlands Kindergarten — now used as offices of Alliance Hotels in Nairobi — and Marlborough House Kindergarten in Nairobi’s Westlands — which has been housing the offices of Saba Saba Asili, a political party founded by Mr Matiba.

The business fortunes of Mr Matiba, a man who was appointed permanent secretary at the age of 31 by colonial Governor Malcolm Macdonald, began to decline after he fell out with the then President Moi in 1988 over the conduct of Kanu elections.

The decline has however been partly associated with a dip in the tourism industry after ethnic violence hit the Coast region in the 1990s.

Mr Matiba resigned from the Cabinet in 1988 and for two years concentrated on re-building his business empire with thoughts of expanding his hotel chain to Rwanda, the tiny Central African state then ruled by his friend, Juvenal Habyarimana, who was later to die after his plane was shot down.

In the late 1980s and early 1990s, Mr Matiba joined opposition politics and the demand for multi-party democracy that saw him return to the political limelight on  May 3, 1990 at an international press conference where (together with Mr Charles Rubia) he demanded an end to single party rule.

Two months later, on July 7, 1990, Mr Matiba called for a rally in Nairobi’s Kamukunji grounds which led to his incarceration at Kamiti Maximum Prison where he suffered a near fatal stroke.

Upon his release in June 1991, Mr Matiba flew to London for treatment and returned in 1992 to vie for the presidency.

He lost the election and filed a petition against president Moi. However, the petition was thrown out because he had not personally signed the papers, having partially lost the use of his right hand as a result of the stroke.

Ill health also left him unable to concentrate on rebuilding his business empire that has since been on the decline.

Close associates say that it was the departure of his long term partner, Mr Stephen Smith, who sold his interests in the Alliance Group to Mr Matiba that removed a key player in the running of the Alliance Group Hotels, leading to the decline.

Hillcrest’s problems arose from a debt advanced to Mr Matiba in December 2000.

The bank had initially put a demand of Sh544 million but reduced it to Sh360 million after the appointment of a receiver manager.

The Matiba family had tried to contest the charge after it turned out that their lawyer did not have a practising licence.

Although the High Court stopped the sale, the Matiba family has finally consented to the sale opening a new corridor by local school chains to pick up the choice facilities.

Besides the Karen-based schools, Hillcrest also owns another facility opposite State House, Nairobi.

An earlier attempt to sell the schools to Braeburn Ltd saw Mr Matiba go to court to block the transfer of the property. A statement signed by the Managing Director of Braeburn had then indicated that they had purchased the assets.

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Additional reporting by Githua Kihara and Benson Wambugu.