The owners of one of the largest private school operators, GEMS Education, are considering options that include the sale of ownership stake in the business.
GEMS is one of the oldest educational institutional operators in the region for over 60 years.
The group operates more than 60 schools across North Africa and the Middle East, with a student body of over 130,000. The group is also present with educational institutes in Asia, Europe and North America.
GEMS Education founder Sunny Varkey and private equity firm CVC Capital Partners are both looking to sell their stakes in the education giant, which could be valued as high at $6 billion.
CVC Capital bought a stake in GEMS Education in 2019, prior to which the entirety was owned by Sunny Varkey.
Large financial sponsors and Middle Eastern sovereign wealth funds are currently looking into the business, the owners are working with Morgan Stanley and Goldman Sachs Group Inc., according to the source.
The owners are looking into offering an IPO as a potential option for sale. Reportedly, deliberations are still in progress and there is still no confirmation that CVC Capital or Varkey, will proceed with the sales.
Here’s everything we know about the sale of GEMS Education so far:
- GEMS Education: likely buyers of the school
- GEMS Education for sale: Could this affect school fees?
- GEMS Education for sale: Learn more about Sunny Varkey
GEMS Education: likely buyers of the school
There is certain to be no shortage of buyers for GEMS Education. In 2021, the global education market was estimated to be worth around $86 billion.
Post-pandemic – despite a huge increase in online learning – annual growth rates of 10 percent are expected for the next six years.
In the US, education industry revenues in 2020 were close to $300 billion.
So, who is knocking on Varkey’s door? Here are our leading contenders:
- Bright Horizons
Based in Ohio, the largest provider of child care in the US – plus other products such as back up child care – would make an interesting fit. It currently has more than 1,000 child care centres and 30,000 staff, but has been eyeing a move into the mainstream education sector. Varkey would offer a fast-track entry. And the US giant has the cash, with a market value in excess of $10 billion. - TAL Education
The Chinese education giants is worth around $32billion and saw 2021 revenues of $4.5 billion. It serves 30 million students in China across 56 cities. GEMS is a dwarf by comparison – but pandemic induced financial losses, and the appeal of a foothold in the UAE, could be tempting for TAL. - New Oriental Education and Technology
Another Chinese giant, also worth $32 billion. With 45 million students on the books and a heavy focus on pre-school education, GEMS would be a neat step with plenty of synergy. With 2021 profits of $400 million it is in better financial shape than TAL Education. - Warren Buffett
The world’s most famous investor has a lot in common with Varkey when it comes to philanthropy. But Buffett is mostly interested in the numbers, and the GEMS numbers are good – more importantly, the growth rates in education post-pandemic make it a hot industry. Don’t rule him out. - Byju’s
Formerly known as “Think & Learn” it is famed for its online platform Student Hub. It is one of the most successful start-ups ever in the education sector, and widely praised for the quality of its products.
With a market value of $22 billion, we wouldn’t be surprised to see the company try and get a slice of a more established, traditional educator like GEMS. One to watch for sure.
GEMS Education for sale: Could this affect school fees?
As potential buyers circle around the UAE’s biggest schools operator GEMS Education, experts are warning that the rules over school fee caps will need urgent clarification – or GEMS pupils could face fee rises.
Arabian Business revealed last month that GEMS Education is exploring a potential $6 billion stake sale, and that new owners could ultimately take full control. Some of the world’s biggest education providers in China and the USA have been touted as potential buyers.
But whether a change in ownership will mean a change in fees is less clear. In March this year, the Knowledge and Human Development Authority (KHDA) announced that schools would not be allowed to raise tuition fees this year. The last permitted fee increase was for the academic year 2019-20.
But an industry source explained: “This is a bit of a grey area because what the KDHA does is decide on what level of increase can be made in fees, if any. What it doesn’t set is the actual fees. So you could have, for example, a new owner from China that comes in and decides they want to change the fees. They are not technically increasing them as per KHDA rules.”
GEMS Education is one of the oldest and largest Kindergarten to Grade 12 / Year 13 private education providers in the world. Founded in the UAE in 1959, it now has schools in the Middle East, North Africa, Asia, Europe and North America. In the MENA region alone, it owns and operates over 60 schools, serving in excess of 130,000 students.
It is believed that the owners are examining many options, which include the sale of ownership stake in the business.
CVC Capital and Sunny Varkey may sell their stakes in a deal that could value the school chain at as much as $6 billion, unnamed sources told Bloomberg. Large financial sponsors and Middle Eastern sovereign wealth funds are currently looking into the business, the owners are working with Morgan Stanley and Goldman Sachs Group Inc., according to the Bloomberg source.
GEMS Education for sale: Learn more about Sunny Varkey
Sunny Varkey is the founder and executive chairman of the GEMS Education Group – the largest operator of private kindergarten to grade 12 schools, the world over.
An entrepreneur in the education industry, Kerala-born Varkey has been in the UAE for over six decades and owns a network of over 80 schools worldwide.
Before taking on the role of GEMS Group’s founder and executive chairman, Varkey was previously employed with Standard Chartered Bank, a small trading company and maintenance company as well as, work in the hotel and healthcare industry.
The 65-year-old has partnered with notable entities such as the World Economic Forum, Microsoft, United Nations Educational, Scientific and Cultural Organisation (UNESCO) and the Clinton Global Initiative.
Over the years, Sunny Varkey has been widely recognised. The UAE Ministry of Education bestowed an award of distinction for his service and contribution to the nation.
He has also been honoured with India’s Padmashri Award, which is one of the highest civilian honours, and the Rajiv Gandhi Award for Eminent Educationist in 2008.
In 2012, he was also named UNESCO Goodwill Ambassador for Education Partnerships.
Today, the education mogul holds a net worth of $1.7 billion, according to Forbes.
Here are 5 facts about Sunny Varkey, owner of GEMS Education:
- Born: Varkey now 65 years old, was born in Kerala in 1957 and moved to Dubai with his family in 1959.
- Education: Varkey did not go beyond high school, his schooling included a Catholic boarding school in Kerala, St. Marys Catholic High School in Dubai, Bembridge School in the UK and British Council, Dubai.
- Family: Son of Mariamma Varkey and K.S Varkey, who taught members of the Dubai royal family and started Our Own English High School, Dubai. He is married to Shirley Varkey and has two sons who are also part of the GEMS Education Group, Dino and Jay Varkey.
- Work: His employment history includes a role at Standard Chartered Bank, time with a small trading company and maintenance company, as well as experience in the hotel and healthcare industry.
- Net Worth: Varkey is worth $1.7 billion (as of October 2022), according to reports.
GEMS: Varkey took over operations of Our Own English High School in 1980, which had around 400 students at the time, and established Global Education Management Systems (GEMS) in 2000.
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