GEMS Mulls $5bn IPO Delay After Fee Freeze

GEMS Education is mulling a postponement of its estimated USD $5bn IPO, after authorities froze school fees in Dubai, its largest market, for the 2018-19 academic year.

Dubai-based group, GEMS Education, which operates almost 250 schools worldwide, is considering the postponement of its initial public offering (IPO) according to business newswire, Bloomberg.

According to the news and data service, question marks as to whether to continue the IPO arose after the Dubai authorities announced no new school fee rises would be approved for 2018-19. Revenues from Dubai are the dominant force on the company's s balance sheet, and changes in Dubai have an immediate impact on the company's revenues and profits.

The company is said to be reviewing the potential impact on the projected bottom line after the decision to keep school fees the same for the next academic year.

If the group does decide to postpone the IPO, it may revisit the share offering later in the year, or consider selling a stake to a single buyer, a source close to the matter said.

News of the group approaching four well known investment banks for the offering - Merrill Lynch, J.P. Morgan, Credit Suisse and Morgan Stanley - emerged in December 2017. At that time the IPO value of the company was between $4.5 billion to $5 billion. 

GEMS Education has 250 schools in 14 countries, making it one of the world’s biggest education providers. The group owns and operates 47 schools and nurseries in the UAE, Qatar and Saudi Arabia.

GEMS Education is partly owned by Fajr Capital, Bahraini state investment fund Mumtalakat and US buyout group Blackstone. It was set up by two Indian teachers – KS Varkey and his wife Mariamma – after arriving in Dubai in 1959.

 

David Westley, co-founder of WhichSchoolAdvisor.com, Fiona Cottam, Chief Academic Officer and Principal at Hartland International School and Mark Steed, Director at Jumeirah English Speaking School discuss some of the ramifications of the decision to freeze fees at Dubai schools for the 2018-19 academic year.


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