As potential buyers circle around the UAE’s biggest schools operator GEMS Education, experts are warning that the rules over school fee caps will need urgent clarification – or GEMS pupils could face fee rises.
Arabian Business revealed last month that GEMS Education is exploring a potential $6 billion stake sale, and that new owners could ultimately take full control. Some of the world’s biggest education providers in China and the USA have been touted as potential buyers.
But whether a change in ownership will mean a change in fees is less clear. In March this year, the Knowledge and Human Development Authority (KHDA) announced that schools would not be allowed to raise tuition fees this year. The last permitted fee increase was for the academic year 2019-20.
But an industry source explained: “This is a bit of a grey area because what the KDHA does is decide on what level of increase can be made in fees, if any. What it doesn’t set is the actual fees. So you could have, for example, a new owner from China that comes in and decides they want to change the fees. They are not technically increasing them as per KHDA rules.”
GEMS Education is one of the oldest and largest Kindergarten to Grade 12 / Year 13 private education providers in the world. Founded in the UAE in 1959, it now has schools in the Middle East, North Africa, Asia, Europe and North America. In the MENA region alone, it owns and operates over 60 schools, serving in excess of 130,000 students.
It is believed that the owners are examining many options, which include the sale of ownership stake in the business.
CVC Capital and Sunny Varkey may sell their stakes in a deal that could value the school chain at as much as $6 billion, unnamed sources told Bloomberg. Large financial sponsors and Middle Eastern sovereign wealth funds are currently looking into the business, the owners are working with Morgan Stanley and Goldman Sachs Group Inc., according to the Bloomberg source.
Update:
The KHDA has clarified to Arabian Business the fee process in case of an ownership change:
“Any change of ownership at any existing private school in Dubai will only impact the owner’s details on the school’s permit. All other details, including school fees, will remain the same,” the organisation said in an email.
“Any existing schools that wish to increase or change the school fees must follow the fee framework, which outlines the education cost index and any permitted fee increases.”
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