Malaysian fund Khazanah buys 3% stake in Dubai's GEMS Education

Financial terms of sale were not disclosed and deal is expected to be concluded this week

DUBAI, UNITED ARAB EMIRATES, Jan 27, 2016. A mathematics classroom at Gems Wellington Academy. The school has converted 12 classrooms into a large plaza which provides a flexible environment to children to learn.
Photo: Reem Mohammed (Reporter: Nadeem Hanif  Section: NA) Job ID: 36151 *** Local Caption ***  RM_20160127_GEMS_23.JPG
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Khazanah Nasional Berhad, the Malaysian government-owned fund, has acquired a 3 per cent stake in GEMS Education  from the Varkey Group, the majority owner of the Dubai-based school operator.

The investment adds to Khazanah's indirect interest in the company through its stake in Fajr Capital, the Dubai-based private equity investor which in 2014 purchased a minority stake in GEMS with a consortium that included Mumtalakat, Bahrain's sovereign wealth fund, and Blackstone.


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Financial details of the latest Khazanah transaction were not disclosed and the deal is expected to be completed this week, the company said.

The Varkey Group remains the biggest shareholder in GEMS after the sale to Khazanah, which bought existing shares in parent company GEMS Menasa Holdings from the Varkey Group. GEMS will receive no proceeds from the sale, the company said.

"This transaction reinforces our relationship with a leading global sovereign wealth fund," said Dino Varkey, chief executive of GEMS Education.  "This is the second sovereign wealth fund to join us in our journey to deliver high-quality education across our constituent markets. We are pleased that Khazanah shares our belief in the power of education to shape and improve lives."

GEMS said in December its 2017 financial year net profit rose 2.5 per cent, boosted by increased average revenue per student. Net income in the 12 months ended August 31 rose to US$129.6 million versus $126.5m in the same period last year.

The company's revenues rose 17.3 per cent to $926.2m in the 12 months ended August 31 from $789.7m in the same period last year. Average revenue per student rose 6.6 per cent to $8,079 in the 12-month period from $7,579 in the same period last year.

The company said that enrolment rose to 114,644 in the 12 months ended August 31, a 10 per cent increase from the previous year when enrolment increased to 104,200.

GEMS said that it had secured a $1.25 billion seven-year loan after the end of August of which $900m had been drawn. It said that the syndicated loan was led by Abu Dhabi Islamic Bank, Emirates NBD Capital, HSBC Bank Middle East, Mashreq Bank and Noor Bank.

The company also said that it had secured a $250m, five-year revolving credit facility.