GLOBAL: GFH Capital is
eyeing a majority stake in a Dubai-based private school against the
backdrop of a significant Islamic investment wave into the lucrative
private education sector.
To be executed within the next 12 months, GFH Capital’s planned acquisition
follows its inaugural investment in the private education sector last May
involving another Dubai-based institution. The impending 80% stake purchase
in the school valued at AED200 million (US$54.43 million) is expected to
reflect positively on GFH Capital’s financial result. “Building on its
strong reputation, the school has reported steady growth in enrolment
year-on-year, a trend which is expected to continue in line with the
growing demand for high-quality international standard education in the UAE
and across the MENA region,” noted Nabeel Mirza, the firm’s compliance
director and MLRO, in a bourse filing.
And it would not be surprising to see GFH Capital continue expanding its
education portfolio as the education segment continues to grow in appeal as
an asset class due to changing demographics in the GCC (including a rise in
expat community), an increasing demand for international curriculum and a
higher purchasing power. Figures from global consulting firm Strategy&
show that the K-12 public and private education market in the region could
reach US$90 billion in 2020, more than double from US$36 billion in
spending five years ago. In terms of students, the growth trajectory is
anticipated from 6.35 million students to 8.25 million students over the same
period.
The GCC aside, Shariah investors are also pouring money abroad to
capitalize on this global phenomenon. Saudi Arabia’s SEDCO Holding Group in
May this year set foot in the Turkish education sector – said to be the
fastest-growing in the world – by acquiring a 50% shareholding in Merktebim
Okullari, a local private school operator with 17 schools to its name and
plans to add eight more before the year ends. Saudi’s Itqan Capital is also
looking to introduce a US$200 million Shariah compliant private equity
education fund.
The Sukuk market is also seeing increasing activity in the education space
with Khazanah Nasional’s pioneering SRI Sukuk – also the world’s first
ringgit-denominated Sukuk of its kind – designed to support the
establishments of new schools in Malaysia via its Yayasan AMIR’s Trust
Schools program (See Case Study Vol 12 Issue 27: ‘Khazanah Nasional:
Creating a new asset class’). The world’s largest provider of K-12 private
education, GEMS Education, also tapped the Sukuk market with a US$200
issuance in 2013 to fund its expansion plans; and recognizing the prospects
of the segment, the following year Bahrain’s Fajr Capital led an investor
group to acquire a significant minority stake in GEMS Education.
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