CASE STUDY: Preserving Mission after IPO at Cairo for Investment and Real Estate Development

I. INTRODUCTION

The Kallas are a mission-driven family. Dr. Hassan El Kalla founded CIRA in the early 90s with the mission of transforming Egypt bottom-up, student by student. He believes that Egypt’s greatest resource is its people and that quality, accessible education has the power to create generations of problem solvers who will positively impact the country. Dr. Hassan’s children are a new generation championing this mission at CIRA with Ahmed as a board member, Sara as deputy CEO, and Mohammed as CEO. 

CIRA offered an IPO in 2018. On opening day, the stock was 10.36 times oversubscribed and the company enjoys a steady growth in profit that makes investors excited. Mohammed said, “We chose to be a trendsetter and not a follower.” CIRA created the education subindex on the Egyptian Stock Exchange (EGX) and was the first education company to IPO in the country. Since then, 5 more companies have joined or are joining the subindex. CIRA’s success is catalyzing Egypt’s education industry, and investors are eagerly buying shares as the company grows. However, more money brings more pressure. How will the company change as its capital changes? 

“Investors aren’t interested in mangoes. They want lettuce,” Ahmed El Kalla said. Ahmed is a board member of Cairo for Investment and Real Estate Development (CIRA), the largest integrated provider of educational services in the Egyptian private sector. In the 2021 - 2022 academic year, CIRA operated 24 schools with 30,900 students and one university with 14,000 students. Ahmed was referring to the short-term, dividend-driven motivations of their new investors. He explained that mango trees need at least 5 years to bear fruit while lettuce can be harvested every 10 -15 days. Pressure from shareholders to maximize profit affects the company’s strategy and ability to accomplish its mission, and CIRA has even more shareholders than before the IPO.

But mission and profit can have tradeoffs. Rapid expansion threatens to diminish the quality of education. Talent acquisition can be challenging in education and building management capacity is difficult in a business dominated by the family. Also, pressure to grow tests the boundaries of CIRA’s mission. Egypt has always been at the center of CIRA’s work. However, looking for new markets for growth, the company is looking to expand throughout Africa. How can CIRA both satisfy its investors and uphold its mission?

Read the Full Case Study