As Taaleem readies an IPO, GEMS too could follow in going public for new funds
Dubai: The IPO from Dubai school operator Taaleem, and a possible one from GEMS, will garner a lot of interest from a group that knows their operations well enough – parents who have children at these schools.
While returns on these investments will depend on how well UAE schools keep doing on new enrolments, education providers could be winners for your stock portfolio. “Picking companies that have shown themselves to be capable of continuing to grow even though disruptions could result in some profitable choices,” said Dr. Matthew Sukumaran, Chief Operating Officer at Heriot-Watt University Dubai.
“The economic rigour one experiences in the UAE is conducive for a sector that caters to placements, internships and job opportunities for students.”
Taaleem Holdings plans to open four new premium British schools in the next three years through funds raised from the IPO. “We will be building a Dubai British School (DBS) in Mira and one in the heart of Jumeirah,” said Alan Williamson, CEO.
“I would encourage parents to invest in the IPO, making this a cooperative concept between the school and stakeholders. Not only can you send your child to a Taaleem school, you can invest in the school and benefit from the returns. We are going to listen to parents as shareholders.
But with parents as investors, isn’t there the burden of even higher expectations from them? Williamson said: “All schools and businesses should thrive on high expectations. In some ways, investing in the IPO allows parents to care more for the school and their child.”
Along with a strong government impetus, the UAE’s K-12 schooling landscape is backed by macroeconomic indicators – stable growth in real GDP and higher numbers of relevant age resident base.
Support from the government comes in the form of public spending, economic diversification, and clarity in regulations and licensing, states LEK Consulting’s latest report on the education sector.
“Within the UAE, Dubai is the largest private international K-12 market with a size of $3 billion,” said Ashwin Assomull, Partner at LEK Consulting.
In the current academic year, private schools in Dubai account for 90 per cent of enrolment, while in Abu Dhabi, it is 68 per cent. “Contrary to common perception, Dubai has one of the more affordable K-12 markets globally,” said Assomull. “Dubai and Abu Dhabi have witnessed a majority share of enrolments in mid-priced and budget schools.”
In Abu Dhabi, expatriates account for 64 per cent of private K-12 market enrolment. This number has grown at a CAGR of 3 per cent from the academic period 2021-23. Emiratis are driving enrolment growth in private K-12 at a CAGR of 4 per cent in the same period.
“The success of the school sector over the last couple of years is directly linked to the success of the UAE,” said Assomull. “And how they’ve managed through the last couple of years of COVID-19, cementing UAE as a hub for global talent.
“Home-grown school operators are raising capital to continue their growth plans so they can invest in more schools, more seats, and quality education.”
While GEMS Education has been largely silent about its expansion plans, the group did release a statement that confirmed it is looking at ways to grow and diversify its business.
“In line with our ambition to push the boundaries of education to ensure as many children as possible around the world reach their full potential, we are always looking at ways to grow and diversify the business,” said GEMS in the statement. “This includes regularly reviewing our capital structure.
“We are focused on building on the success we have achieved not only in the UAE but in other markets such as Saudi Arabia and Egypt.”
If GEMS does do an IPO, parent-investors will be ready. They certainly would have had their ‘practice lessons’.
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