1. education

ICPAK Focus
March 2015
Newsletter
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On Wednesday, March 11 2015, ICPAK will be asking its members to consider a proposal to provide
significant ongoing financial, strategic and operational support to KCA University by entering into a
strategic partnership with Maarifa Education.
Please attend the Special General Meeting to vote on this proposal or arrange for a proxy vote by
filling in the form.
Date: Wednesday, 11th March 2015
Time: 11.30 am
Venue: CPA Centre, Thika Road, Nairobi
Watch ICPAK Chairman discuss the transaction.
We’ve also answered questions you may have on the proposed partnership here.
Message from KCA University Staff and Students
We are excited about the news of the proposed partnership between
KCAU and Maarifa and believe this is a step in the right direction for
our prided university.
The news has brought a wave of optimism amongst students and staff
about our future at KCAU and the legacy we hope to leave. We are
delighted to have the support and financial backing from a team as
passionate about our education as we are, who understand and share
the values we uphold at KCAU and who are determined to support our
transition to a world class university.
This partnership is an opportunity to ensure that KCAU continues to
deliver academic excellence and a fantastic all round student experience
to current and future generations. That is why, we the Student Affairs
department and larger Student Body, urge all ICPAK members to vote
to approve the partnership at the upcoming Member’s meeting.
Roggers Abongo, Dean of Students, KCAU
Albert Rioba, President, Students Executive Council, KCAU
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Message from the Chairman
At the occasion like this, I have the great pleasure
to pass my sincere regards for the support you
have given the council and myself in the last one
and half years.
Professional colleagues, I would like to refer you
to my special communiqué on KCAU-ECP which
was issued on 14th April 2014. As you all know,
I have been updating you on this matter for the
last one year. We have now reached a critical
point on this matter and we expect to make
a final decision during our Members’ meeting
which is scheduled to take place on Wednesday
11th of March 2015.
ICPAK/KCAU-ECP Partnership
The Council of ICPAK has approved an agreement
that allows KCA University to enter into a longterm strategic partnership with Emerging Capital
Partners (“ECP”) and Maarifa Education Holdings
Limited (“Maarifa”). The strategic partnership
with ECP and Maarifa will provide significant
ongoing financial, strategic and operational
support to KCA University. For more information
on this partnership click here.
We believe the partnership will be well-positioned
to achieve strong and reputable institution of
higher learning and increase KCAU value through
its balanced business mix, greater scale and
enhanced efficiencies and competitiveness.
provide KCAU with expansion capital to enable it
to invest in core infrastructure, systems, faculty
training and development, and student facilities.
In addition, Maarifa’s investment will also
establish a scholarship foundation, with initial
seed funding of US$1m, to enable increased
student access to KCAU.
At our Members’ meeting, which will be held
on March 11, 2015, we will ask our members to
approve the partnership. Information about the
meeting and the partnership is contained
in this newsletter including the proposed equity
structure. We urge you to read it carefully and in
its entirety.
Whether or not you plan to attend your members’
meeting, please plan to vote to make sure that
your views are represented at the meeting. If you
do not vote, it will have the same effect as voting
against the partnership.
Each of our council members unanimously
recommends that members vote FOR the
partnership. We strongly support this combination
of our companies and join our boards in their
recommendations.
CPA Benson Okundi
Chairman Institute of Certified public
Accountants of Kenya
In the proposed partnership, ECP and Maarifa will
bring a combination of financial and strategic/
human capacity to KCAU through a long-term
strategic partnership with ICPAK and KCAU,
Maarifa is seeking to invest a minimum of
US$17.5m to benefit KCAU. This investment will
help KCAU to make substantial improvements to
its programs, campuses, and service offerings
to compete more effectively within the growing
Kenyan higher-education market and to attract a
greater number of students. Maarifa’s investment
will address near-term capital requirements and
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ICPAK is asking its members to consider a proposal to provide significant ongoing
financial, strategic and operational support to KCA University (KCAU) by entering into
a strategic partnership with Maarifa.
Who is Maarifa?
Maarifa Edu Holdings Limited (Maarifa) is a
tertiary education holding company founded
by its management team with financial support
from the leading African private equity firm,
Emerging Capital Partners (ECP). Maarifa’s vision
is to build a world-class, pan-African education
company that aims to provide high quality,
market-relevant university-level education to
more than one million Africans over the course of
the next 30 years. To date, Maarifa has invested
in two universities in Africa (Uganda and Zambia)
with total enrolments of over 6,000 students.
In summary, the terms of the proposal would
enable ICPAK to:
• Enter into a long term, strategic partnership
with Maarifa, whose founders are passionately
committed to building world class African
education establishments
•
Deliver on its position as Sponsor of KCAU by
securing the future financial sustainability of
the University
•
Assist KCAU in achieving its mission to
significantly expand access to university
education in Kenya
•
Transform the University through a minimum
investment of US$17.5million into a profitable,
dividend paying asset (without any financial
commitment from ICPAK)
•
Enable
KCAU
to
make
substantial
improvements to its programs, campuses
and service offerings, bringing them up to
international standards to compete more
effectively to attract a greater number of
students
•
Remain the sole Sponsor of KCAU, whilst
complying with all aspects of Kenya’s higher
education and regulatory environment
•
Ensure the academic independence of
KCAU, thus protecting the integrity, quality
and reputation of a respected national
educational institution
•
Establish a Foundation with seed funding of
US$1 million that will grant scholarships to
needy students
To deliver these benefits we need the proposal to
be voted in at a General Meeting of the members
on 11 March. Members who cannot be present in
person are encouraged to use the Proxy Form on
the ICPAK web site to register their vote.
Why do we need things to change?
KCAU’s current position is unsustainable:
Since investing heavily to become a ‘Chartered
University’ in 2013, it has had limited resources
to invest in facilities, training and development.
ICPAK recognises that with KCAU seeking to
compete successfully and educate upwards
of 10,000 students, it needs investment
and operational expertise to support its
transformation into a market-leading university in
Kenya. The Board of Trustees of KCAU authorized
the leadership to begin seeking a strategic
partner and funder in 2011. As part of its search
for this partner, KCAU began discussions with
ECP and the founders and principals of Maarifa
in June 2012, discovering that they shared its
commitment to transforming education in Kenya
and in the region through outcome driven, highquality education.
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So is KCAU being sold?
No. KCAU’s status as a non-profit/Chartered
University in essence means that KCAU is a trust
and all of its assets are protected under the
terms of a trust. No one can own a trust and a
trust cannot be sold. This means Maarifa cannot
make a traditional equity investment into KCAU.
In order to enable Maarifa’s investment, a service
company structure has been developed, whereby
KCAU forms a strategic partnership with a forprofit legal entity that undertakes to provide
the University with core services. This type of
structure is common in the US, other emerging
markets and in Kenya, where several universities
(such as University of Nairobi) also employ this
type of service-company arrangement.
The new entity called KCA Education (KCAE) will
be jointly owned by ICPAK and Maarifa in the
ratio of 25% and 75% respectively. ICPAK will
receive this 25% ownership stake without
making any financial or in-kind contribution
to KCAE.
KCAU will maintain control over core academic
functions including admissions, teaching,
academic testing and graduation decisions. The
principal role of KCAE will be to undertake all
non-academic (non-degree focused) operations
and support services for KCAU. KCAE will
manage non-academic functions such as
enrolment management, marketing, accounting
and financial management. In addition, KCAE
will house all non-degree programs such as
certificates and diplomas – which is now required
under proposed University regulations. KCAE will
charge KCAU a service fee for the provision of its
services to the University.
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How will the funds be invested?
The structure provides for funds to flow through both parts of the KCA Group entities, all of which will
benefit KCA University directly.
Is ICPAK still in control of KCAU?
ICPAK is not “in control” of KCAU today. However,
as the Sponsor, ICPAK has the right to appoint
the Board of Trustees and as such to exercise
control over the University’s assets. ICPAK will
retain sole Sponsorship of the University post
the transaction.
Why is this good for ICPAK
members?
We are excited to be able to support the
transformation of KCA University and the
development of the Kenyan higher education
sector by entering into a strategic partnership
with ECP and Maarifa. This proposed partnership
presents a tremendous opportunity for ICPAK to
secure the future of KCAU, while simultaneously
creating a dividend stream for its members that
can be reinvested in furtherance of ICPAK’s
mission.
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Benefits to KCA University
•
Refurbished, upgraded and expanded
facilities in line with international
standards
•
Enhanced academic program offering
•
Enhanced support for research and
development initiatives
•
Increased employability for students
through market-oriented courses and
improved career guidance services
•
Transformed university with a focus
on entrepreneurship
•
Access to inter-linkages with other
universities/networks globally
•
Establish a scholarship foundation to
enable increased student access to
KCAU
Benefits to ICPAK
•
Long-term solution to ensure the
financial viability of KCAU
•
Reduced potential cash drain on
ICPAK through a need to fund
university
•
Transformation of the University from
a financially-stressed asset into an
inter-related group capable of paying
dividends to ICPAK
•
Stronger foundation for KCAU
to remain a leader in accounting
education while becoming a leader in
the other program areas
•
Continued discounted tuition rates at
KCAU for ICPAK members and their
children
Benefits to Kenya
•
Improves educational offering in the country
•
Serves as a roadmap to attracting greater private sector enrolment in the Kenyan
higher-education sector
•
Supports skills development in Kenya
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