Abstract

Learning Outcomes

This case can be used to teach students the strategic financing decisions faced by family-owned businesses in emerging markets. Upon completion of the case discussion, students will be able to evaluate the trade-offs between debt and equity financing options using frameworks such as the Trade-off Theory, Pecking Order Theory, and Socioemotional Wealth (SEW); analyze how financing choices impact family control, ownership structure, and long-term business sustainability; assess the risks associated with financial leverage and external investment; and explore how financing decisions influence succession planning and strategic growth. Additionally, students will reflect on how family values and legacy shape entrepreneurial finance strategies within the hospitality sector.

Case Synopsis

Afrosayari, a family-owned leisure and recreation park in Nairobi, founded by James Gitundu and led by CEO Alice Mubia, aims to become a premier Pan-African destination celebrating the continent’s cultural diversity. Since its 2016 launch, the business has grown organically through self-funding, offering family-friendly activities, dining, and event hosting, with revenue driven by a peak/off-peak model (KSh 3,000–4,000 per customer, per visit). Now at a pivotal growth stage, James and Alice seek 80% external financing to build a KSh 400 million four-star hotel while covering 20% internally. The case examines their financing options—bank debt, KDC loans, private debt, or equity through Private Equity or the Nairobi Securities Exchange (NSE) each with implications for control, growth, and succession. Operating within Kenya’s booming hospitality sector (35.4% rise in visitor arrivals in 2023), their decisions are shaped by economic trends and Socioemotional Wealth (SEW) considerations, particularly around legacy and control. The leadership structure, led by daughters Alice and Wanjiru’s mother, with sons like full-time employee Peter excluded from ownership, challenges patriarchal norms and raises questions about cohesion. Students must evaluate financing strategies, assess risks like debt leverage or equity dilution, and propose solutions.

Complexity/ Academic level

This case is suitable for undergraduate and graduate students pursuing degrees in finance, entrepreneurship, business strategy, or family business management. It is designed for use in courses such as entrepreneurial finance, strategic planning, risk management, and family enterprise management. The case challenges students to apply financial theories to real-world dilemmas faced by family-owned businesses and encourages critical thinking about ownership, succession, and growth. It is particularly appropriate for advanced undergraduate students and MBA or master’s-level learners seeking to understand how financing decisions intersect with family values, long-term strategy, and sustainability in emerging markets.

Supplementary Materials

Teaching notes are available only to educators upon request from the Case Centre at cases@strathmore.edu

Keywords

Entrepreneurial Finance, Risk Management, Strategic Planning and Family Business Management

Citation

Obonyo, E. (2025). Debt vs. Equity: Steering Afrosayari's Expansion Dilemma. In Strathmore Africa Case Center. Strathmore Africa Case Centre. https://doi.org/10.70268/SACC-01-25-35

Publisher: Strathmore Africa Case Centre

Copyright © 2025, Strathmore Africa Case Centre

Category : Case

Author : Edwin Obonyo

Publisher : Strathmore University

Document ID : SACC-01-25-35