Sunny Varkey, the founder of Gems Cambridge Education, is selling off his school investments in Kenya, including the Regis School in Runda, leaving behind a trail of debt.
The Gems Group may have sold the majority shareholding in Regis School to local businessman Ernest Mureithi for just $1, according to court papers and sources at the school.
However, Mureithi has denied this, saying he is only looking out for Gems Cambridge’s interests in Kenya, and that the school has already found buyers to take full ownership and control.
Meanwhile, NCBA Bank is demanding repayment of a KES 1.6 billion ($15 million) loan. Negotiations are ongoing to settle out of court, according to Mureithi.
Despite attracting hundreds of learners who have paid billions of shillings over the past decade, Gems Cambridge has broken contracts with some firms, leaving debts of over KES 2 billion ($18 million).
Runda Gardens Development Ltd, a real estate firm owned by Kenyan tycoon Peter Burugu and his family, built Regis School’s facilities and is at risk of losing close to KES 1 billion ($9 million) incurred in construction costs.
When Gems Cambridge started operations in Kenya, it signed a deal with real estate firm Goodison Sixty One School Ltd to set up the Karen school, spending KES 3 billion ($27 million) for the project, which was expected to be recovered from Gems Cambridge.
Goodison Sixty One subcontracted experienced architectural firm Symbion Kenya Ltd to design the school and help put it up.
However, Gems Cambridge complained about the quality of the Karen facilities, and a legal battle ensued, which Goodison ultimately lost.
After meeting with the Dubai investors, Burugu struck a deal similar to the Goodison one; build a world-class facility and lease it back to Gems Cambridge to set up Regis School, Runda.
