Investors are taking a back to school approach with some of the recent deals and fund flows the UAE marketplace has been seeing. Image Credit: Shutterstock

2024 is turning into a year when the UAE education sector is unlocking its full potential.

The recent listing of Alef Education on ADX and Brookfield’s stake buy in Dubai-based school operator GEMS has turned attention to this vital sector.

As per a past report by the UAE Ministry of Economy, the education sector grew by a CAGR of nearly 5 per cent over 2018–22. The other notable highlight was the growth in e-learning spending to $7.1 billion in 2023 from a 2017 base of $2 million.

Education fees, one of the base indicators of the entire education economy, have risen from $4.4 billion to $7 billion from 2021 to 2023.

Dubai’s private school numbers

The private school sector in Dubai is experiencing a significant upswing, as evidenced by the latest data from KHDA, the regulator. The emirate witnessed a 12 per cent growth in the 2023–24 academic year, with the total number of students attending Dubai’s private schools surpassing 360,000, almost double that in 2008.

This has been accompanied by a corresponding increase in private schools, which rose from 136 to 220 over the same period. The cost of education in the UAE is one of the highest in the world, with an average of Dh300,000 plus from primary school to university. While more affordable options are available in different emirates, the national average remains among the highest globally.

Brookfield’s GEMS investment

A Brookfield Asset Management-led consortium bought a reported $2 billion stake in GEMS, which makes the transaction the largest private equity deal in a closely held business in the Gulf. The Brookfield acquisition will allow existing shareholders, including the Malaysian sovereign fund and CVC Partners, to exit or reduce their stake in the school operator.

GEMS has a base of over 40 schools nationwide and 135,000 students. As per recent market estimates, the group is valued at $ 6 billion. In the future, we could see a strong possibility for a GEMS IPO, thereby further unlocking the group and sector potential.

Alef Education, a digital education content maker, was recently listed on Abu Dhabi stock exchange. While its stock price is down 17 per cent from their issue price of Dh1.35 a share, the long-term prospects remain strong. Its IPO subscription levels speak volumes about the investor interest.

The current drop can be seen as more of a valuation correction opportunity as investors reassess. Alef Education offers niche products in the online Arabic learning market, with a target base in nations like Indonesia too.

Taleem Holdings, the Dubai school operator, has seen its stock price rally 25 per cent from its initial IPO listing. The recent earnings saw the group report a 15 per cent rise in H1 revenues for the period ending February 2024. This came from record-breaking enrolment of 37,961 student, up 33 per cent on a y-o-y basis.