GCC private education presents investment opportunities

Private education in the GCC is growing at an unprecedented pace and is creating opportunities for investors, a new report says.

Alpen Capital’s GCC Education Industry Report says the number of privately educated students in the region should grow at 3 per cent a year, reaching 13.7 million by 2020.

Alpen is a Dubai-based private investment bank.

Its report says the UAE is the region’s most developed education market and is emerging as an education hub. Enrolments at private institutions in the Emirates accounted for 69 per cent of total enrolments in 2012, up from 39 per cent in 2000.

“The growth of the GCC education sector is driven by factors such as population growth, increasing number of expatriates, the rising importance of high-quality education in the society, and a growing spending propensity,” said Sameena Ahmad, a managing director at Alpen. “The sector is gaining additional momentum from governments across the GCC that are acknowledging the need for an education system capable of producing industry-ready graduates.”

He said that with governments focused on improving education, “the sector presents an interesting investment opportunity”.

The report suggests growth in the education sector will be at the edges of the traditional school ages.

The pre-primary segment is expected to increase from 5.8 per cent of total enrolments in 2013 to 7.4 per cent in 2020. Meanwhile the tertiary segment is expected to surge from 14.8 per cent of total enrolments to 16.5 per cent by 2020.

There have recently been some high-profile investments in the UAE’s academic sector.

Dubai-based Gems Education has purchased stakes in four academic institutions in the past eight months.

Last month, GFH Capital announced the acquisition of an unnamed American curriculum private school in Dubai for US$34 million.

In November, the Dubai-based real estate investment trust Emirates Reit signed an agreement with Gems to acquire the facilities and related assets of Gems World Academy in Al Barsha, by way of an acquisition leaseback deal.

“The education sector in the region is growing at a fast pace and presents opportunities for private investors,” said Mahboob Murshed, also a managing director at Alpen. “The M&A activity in the sector has picked up pace in recent times. Private players, both local and international, are attracted to segments such as the K-12 and higher education, which are the largest within the sector.”

The private investment bank report suggests that new industry-specific, niche sectors such as vocational training, finishing schools, child-skill enhancement and e-learning are also receiving investor attention because of growing demand.

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