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
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.
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| Benson Okundi - ICPAK Chairman 2013-2015 |
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.. 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. 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 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.
Proposed ICPAK - KCAU - Maarifa Partnership
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, high quality education.
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 for profit 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.
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.
Benefits to KCA University Benefits to ICPAK
• 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
• 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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