GEMS snaps up Saudi Arabia's largest private school operator

The latest acquisition gives the education provider a solid footprint in the most populous GCC country

Ahmed Al Qahtani (left) the CIO of Hassana, along side Saad Alfdly the CEO of Hassana Investment Company, Sunny Varkey the founder of GEMS Education and Dino Varkey the CEO of GEMS Education.

Dubai-based Gems Education bought Saudi Arabia's largest private school operator, expanding its footprint in the Arab world's largest economy and most populous country in the Gulf.

Gems, the largest private school operator in the UAE and among the biggest education providers globally, did not disclose the financial details of the deal announced on Thursday. The Financial Times reported the value of the deal as between $500 million and $600m.

As part of a joint venture agreement with Hassana Investment Company, the investment arm of Saudi Arabia’s General Organisation for Social Insurance (GOSI), Gems acquired Ma’arif Education Group, which runs national and international schools across the kingdom with more than 22,000 students enrolled. The Gems venture with Hassana aims to invest up to $800m over the next decade to acquire and develop more than 50 schools that will educate more than 100,000 students across the country.

"The Ma’arif acquisition of 14 schools is an ideal platform from which to grow and we are incredibly excited about further expansion in the country. Saudi is one of the most attractive growth markets for Gems Education and we are committed to supporting the education sector in the country," said Dino Varkey, chief executive of Gems Education.

The number of students in Saudi Arabia is forecast to grow at an annual rate of 3.5 per cent to 11 million by 2020 from an estimated 9.2 million in 2015, according to a 2016 report from Dubai-based investment bank Alpen Capital.

Gems now owns and operates more than 50 schools with more than 124,000 students across the Middle East and North Africa. In December the education provider exercised an option under an existing partnership to acquire an initial 50 per cent stake in four schools in Egypt, which it has been managing since 2017.

The stake option is part of the company’s 50:50 joint venture with Egypt’s biggest listed investment bank EFG Hermes. The JV is part of plans by the two entities to tap into the Mena region’s largest education market, which has more than 20 million students enrolled.

Under the arrangement, the parties plan to acquire more than 30 schools across Egypt. They aim is to invest $300 million in the sector over three years under EFG Hermes’ Egypt Education Fund.