Fajr Capital, Mumtalakat & Blackstone back GEMS Education’s emerging mkts business

GEMS Education, the Dubai-headquartered global education services firm founded by Indian origin entrepreneur Sunny Varkey, said on Wednesday that an investor group led by Fajr Capital has acquired a significant minority stake in its emerging markets business, covering the Middle East, North Africa and East Asia.

Bahrain Mumtalakat Holding Company (Mumtalakat), the sovereign wealth fund of Bahrain, and Tactical Opportunities funds managed by Blackstone are the other partners in the investment consortium.

GEMS Education, a UAE-born brand founded 54 years ago, is now the world’s largest provider of K-12 private education – operating more than 50 schools, educating over 140,000 students and employing over 13,000 people across 19 markets in the Middle East, North America, Europe, Asia and Africa.

The investment in GEMS Education separates the global education business into two discrete entities – with the investor group investing in the high-growth markets of the MENA and ASEAN regions. Private education in the emerging and developing world is characterised by increasing school age populations, high demand dynamics for quality education and fast-growing middle classes.

Fajr Capital, Mumtalakat and Blackstone will now work closely with GEMS Education’s existing shareholders to accelerate expansion plans in the company’s key growth markets, particularly Saudi Arabia, Qatar, Malaysia and the Kingdom of Bahrain.

Michael Peat, a former partner with KPMG, will be the new independent chairman of the board. GEMS Education had recently appointed Saeed Al Muntafiq as the group CEO.

Sunny Varkey, founder, GEMS Education, said: “Our expansion in existing markets and to new markets requires a significant long-term commitment in resources. The agreement with our new shareholders allows us to accelerate our expansion plans and secure first-mover advantage in markets with strong fundamentals and clear opportunities over both the medium and long term. It enables us to continue to develop and invest in our home market of the UAE and explore opportunities across neighbouring GCC markets, particularly the Kingdom of Saudi Arabia, Qatar and the Kingdom of Bahrain.”

As per its website, GEMS has six schools in India including two each in Gurgaon and Hoshiarpur besides one each in Kolkata and Batala.

Varkey, along with diversified business conglomerate Aditya Birla Group, is reportedly among the companies in race to acquire school business of debt-ridden education services company Educomp Solutions Limited.

Varkey is also a co-promoter of public listed education services firm Everonn.

Speaking on the latest investment, Iqbal Khan, CEO of Fajr Capital, added: “Today’s announcement marks Fajr Capital’s fifth strategic investment in 2014 and sends a strong message about our ability to focus on the most attractive investment opportunities in our core markets. GEMS Education understands the dynamics of the education sector and the opportunities presented by offering quality, independent education in markets where there is a clearly identified and often latent demand.”

Mahmood Hashim Al Kooheji, CEO of Mumtalakat, said: “Education is an industry which has solid growth potential and GEMS has proven to be a leader in this sector across the region.”

Andrea Valeri, senior managing director of Blackstone Tactical Opportunities, said: “GEMS has developed into the market leader in the education sector in the region, and we look forward to working with the other shareholders and the management team as the business expands its operations.”

Deloitte acted as sell-side advisors on the deal, with Allen and Overy providing legal representation to GEMS Education. Barclays, Freshfields Bruckhaus Deringer and KPMG acted on behalf of the investor consortium.

(Edited by Joby Puthuparampil Johnson)

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