Private Equity Mulling GEMS Takeover - Report

CVC Capital Partners and TA Associates are among the firms in talks with GEMS Education regarding a buyout of the company's leading shareholders, EducationInvestor Global reports. There has been no official comment on a deal.
Private Equity Mulling GEMS Takeover - Report
By David Westley
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CVC Capital Partners and TA Associates are among a host of firms reportedly in talks with GEMS Education about taking stakes in the Dubai-based, global education company, according to investment and industry publication, EducationInvestor Global.

According to the report, the private equity firms re-started talks with GEMS Education "in recent months" after discussions over a possible takeover stumbled in the summer. CVC and TA would acquire the stakes of a number of the company's shareholders in a capital swap the report said.

Sunny Varkey, Fajr Capital, and Mumtalakat Holding are the majority shareholders in the company. Private Equity firm Blackstone own a minority stake.

It is not clear what size holding CVC and TA Associates would acquire, however according to sources speaking to EducationInvestor Global, GEMS Education is looking for a price to earnings multiple of 14 to 17 of Earnings Before Interest and Tax, Depreciation and Amortisation (EBITDA). That would put the value of the deal in the range of UKP 3 billion (14.4 billion AED) at the lower range, and UKP 4 billion (19.2 billion AED) at the upper based on key shareholder selling their stockholdings.

That multiple is lower than that agreed by Jacobs Holding in its takeover of global education group Cognita last year.

Credit Suisse and JP Morgan are said to be advising GEMS Education on the deal.

A source told EducationInvestor Global the deal is "imminent". Both Blackstone and Fair have options written into their contract, allowing them to offer their holdings for a set price within a specific time frame.

Last year GEMS Education was reported to be looking at an IPO. According to the reports at the time the float was were derailed as a result of the school fee freeze in Dubai.

Should the deal proceed it is not clear what impact there would be on operations in the UAE. GEMS Education was asked to comment, but its spokesperson told its policy is not to comment on "rumours or speculation".

CVC declined to comment to EducationInvestor Global. TA Associates did not respond to requests to comment.

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