India’s JV Ventures latest to confirm interest, plans $300m spend to buy existing schools.
Schools in the UAE are back at being hot investment choices, with new entrants lining up massive funds to build or acquire existing assets.
India’s JV Ventures is the latest to get into this space, with a top official recently confirming plans to spend up to $1 billion to buy between ’12-15 schools’ in the UAE and the region.
“About 30 per cent of the investment exposure would be for the UAE,” said Vishal Goel, the co-founder of JV Ventures. “We are in the advanced stages of discussion with some schools and will likely close it soon.”
The company’s portfolio includes the Jain Group of Institutions in Bengaluru and Sancta Maria International Schools in Hyderabad.
Investment model
The company is eyeing schools offering international curriculums with a fee structure ranging between Dh44,000-Dh90,000 a year. As part of the company’s investment model, JV Ventures will acquire the infrastructure from the current owner and lease it back to them.
The operation of the school is then entrusted to experienced school operators. “This approach allows schools to allocate more resources to educational initiatives by relieving the burden of infrastructure management from the school operator,” said Goel.
The UAE, and Dubai in particular, has one of the best private education regulators in the world. They have created a very healthy ecosystem for education, making it easy for parents to choose schools for their children.
On the likely RoI, Goel said, “We are not investing in education; we are investing in real estate assets. Currently, global interest rates are very high, and since the dirham is pegged to the dollar, we are looking at a yield of 7 per cent on school assets.”
Investors are attracted by opportunities in the UAE education value chain, right from early childhood learning to enrolling for higher academic credentials.
With multiple new school openings already and many more in the pipeline, the sector is seeing investment inflows in the region of $500 million, said Ashwin Assomull, Partner at UK-based LEK Consulting and Head of its Global Education Practice.
More new schools
This year, the sector is preparing for the launch of at least six new schools, some of which could open as early in the 2023-24 academic year itself. Sources at Dubai’s Knowledge and Human Development Authority (KHDA) indicated that more school openings are on the horizon, with additional announcements expected in the coming months.
The new schools are – Noya British School, Cranleigh Abu Dhabi, Arcadia Global School, Nord Anglia International School Abu Dhabi, Rashid and Latifa, and a possible one from GEMS.
Earlier this month, Taaleem officially announced the opening date of Dubai British School – Jumeira Campus. The facility will open in August 2024 and cater for up to 1,650 students.
2020 – 2021 – 279,191 students in 210 schools
2021 – 2022 – 289,019 students in 215 schools
2022- 2023 – 302,262 students in 215 schools
2022- 2023 (Fall) – 326,001 students in 216 schools
Enrolment rates are skyrocketing. Dubai’s private school enrolment grew 4.5 per cent, admitting 326,001 students compared to 311,910 the previous year. The new institutions will add thousands of new seats nationwide.
“There have been several operators who have been waiting and watching to see how the UAE grows,” said Shweta Wahi, Director, Operations and People and Culture at Transnational Academic Group Middle East and at Curtin University Dubai. “A lot of the people on the fence are now making moves to enter the market.”
Multiple factors for success
Assomull said that by population growth alone (expected to surge to nearly six million in 20 years), UAE schools would organically see more enrolments.
The UAE’s high GDP per capita and the financial resources available to residents contribute to a strong demand for education services throughout the value chain. And there is a very strong correlation between enrollment in private schools and GDP.
“With the situation around Russia and Ukraine, the wealthiest people (from there) have decamped to Dubai. From India, there is a continuous migration of folks. As taxes increase on European citizens, many UK and European expatriates are considering moving to Dubai.”
Assomull said all these present plenty of opportunities for new schools. “It’s a combination of local home-grown operators and new investors. Private equity investors are looking at investing in local platforms.
“For example, the global K-12 provider Cognita Education witnessed impressive growth in a short time in the UAE.”
Stiff competition
Shools offering unique concepts, innovative curricula, and disruptive products will be the winners, said Dr. Adil Al Zarooni, CEO of Al Zarooni Emirates Investments and founder of Citizen School.
The school was launched last academic year and has already exceeded 50 per cent of targeted enrolment rates, and more campuses are on the horizon. While existing curricula are highly effective, the need is for a unique ‘Dubai curriculum’, said Dr. Al Zarooni.
Entrepreneurship is no longer a privilege. It is survival. For the last 200 years, the education system has created ideal employees. That needs to change. We need to educate children to have entrepreneurship skills right from the get-go.
“One that trains students to become entrepreneurs, instead of workers, from the early years. Now is the time to ensure children develop skillsets that AI wouldn’t easily take on in the future. That is going to be a keyword in the education sector.”
“Irrespective of the target audience, demography, location, and price point, most schools today lack a clear focus on what their offering to the parents and students are.”