Varkey: The 500,000,000 Dollar Man
In an interview and profile in April's Forbes Asia magazine GEMS Education boss, Sunny Varkey, who made Forbes' Billionaire List for the first time this year with an estimated net worth of $1.8 billion, makes some interesting comments, the most relevant to the UAE we detail here.
The GEMS Education boss also shines a light on the GEMS business itself, again the most relevant of which we include below.
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Last year GEMS Education made $500 million in revenues making it the largest operator of private kindergarten-to-grade-12 schools in the world.
During Dubai’s downturn starting in 2008, GEMS continued to grow at 7% annually, and with the ongoing revival, growth has climbed back to 11%.
According to Varkey: "Education is recession-proof. Parents would forgo their food to send their children to the right school.”
Varkey bases the GEMS Education system on an airline model with economy, business and first class options "to make top-notch education available based on what families could afford”. GEMs Education schools have fees ranging from $250-a-year (in India) to $40,000-a-year (147,000 AED) tuition (in the U.S.).
GEMS Education has a network of 132 schools with 142,000 students in 15 countries including the U.S., China, the U.K. and India. (However by far the majority are in the UAE). Varkey claims he will have 2,000 schools in six years (by 2020).
The first dollar of profit for a GEMS school "often" comes in year eight of school operations. This is a considerably shorter period than the 12-years we have been quoted elsewhere.
Varkey believes emerging economies are more mature than developed economies when it comes to private education. The GEMS boss argues private education providers should be given a bigger role in education in markets where presently the state provides education (usually for free).
“We’re in a sector that is still controlled and monopolized by the government. But the education crisis is making it obvious that governments alone can’t meet rising demand.”
According to Forbes in countries such as the Philippines and South Africa "GEMS advises governments on managing their public school systems". No mention is made as to whether GEMS Education advises the government of the UAE...
One of the biggest impediments to GEMS Education growth is funding, but the company has no no plans to list anytime soon. “We’re not Facebook. Education needs a lot more patience and hard work.”
Sunny Varkey, 56, never went beyond high school himself.
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To read the full interview with Sunny Varkey, the Forbes Asia interview may be found here.
