Blackstone and Fajr working on a deal to buy 20% of Gems Education, sources say

Blackstone Group and Fajr Capital are close to a deal to acquire a minority stake in Dubai-based Gems Education, the world’s biggest closely held schools operator, three people with knowledge of the matter said.

New York-based Blackstone is investing in Gems through its special-situations arm, the people said, asking not to be identified as the information is private. A formal agreement to buy 20 percent of the company may be reached in the next couple of weeks, two of the people said. The deal may value the stake at about US$350 million, they said.

Gems, which ioperates more than 100 schools across 14 countries, may sell as much as 25 per cent of the company to raise up to $500m, the Gems chief operating officer, Dino Varkey, said last year. The company had hired Credit Suisse Group to help manage the sale, Mr Varkey said.

Gems reported attributable profit of $74.4m for the year ended March 31, in a statement to the Dubai stock exchange in July.

A deal for Gems would be the first investment for Blackstone in the Middle East. Private-equity firms are stepping up acquisitions in the region as markets improve and companies seek cash for expansion.

Fajr had initially teamed up with Bahrain’s Investcorp Bank to buy a minority stake in Gems, people familiar with the matter said in April. Dubai-based Fajr brought in Blackstone after Investcorp dropped out of talks, two of the people said this week.

Fajr, backed by investors including the Malaysian sovereign wealth fund Khazanah Nasional, led a group of investors to buy the Dubai-based oil services company National Petroleum Services in a deal valued at more than $500 million, the company said.

A Dubai-based spokesman for Fajr declined to comment, while a spokeswoman for Gems did not immediately return an e-mail seeking comment. A representative for Blackstone based in London and Emily Hartman, a spokeswoman for Investcorp, declined to comment.

* Bloomberg News

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