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Mumtalakat, Fajr Capital and Blackstone Complete Exit From Gems Education

Date 01 Aug 19

A consortium of investors led by Fajr Capital, including Tactical Opportunities funds managed by Blackstone (Blackstone) and Bahrain Mumtalakat Holding Company B.S.C. (Mumtalakat), the sovereign wealth fund of the Kingdom of Bahrain, have today announced the completion of their divestment from GEMS Education to a consortium led by CVC Capital Partners.

In July 2019, funds advised by CVC Capital Partners signed a definitive agreement to acquire approximately a 30% stake in GEMS Education, one of the world’s oldest and largest providers of private K-12 education. The transaction was subject to customary closing conditions, all of which have been satisfied.

GEMS Education, a UAE-born brand founded sixty years ago, educates over 120,000 students across 48 schools in the Middle East. Fajr Capital, Blackstone and Mumtalakat invested in GEMS Education in 2014 and subsequently partnered with the Varkey Group to build the company into a world-class institution and support its long-term growth. Since then, GEMS Education has delivered strong financial and academic results, invested over US$1 billion to build sixteen new schools and upgrade existing infrastructure, and grown in its existing markets, namely the UAE, as well as entering into new markets such as the Kingdom of Saudi Arabia. This growth was achieved through a combination of both inorganic and organic initiatives as well as through a diversification in education and service offerings.

Dino Varkey, CEO, GEMS Education, said “The completion of the Fajr Capital, Blackstone and Mumtalakat investor group’s exit from GEMS Education to a consortium led by CVC Capital Partners marks another chapter in the evolution of our company. We thank each of these investors for their contributions over the past five years. Sixty years on from opening our first school, we believe more than ever now that ‘whatever the question, education is the answer.’ We are committed to this mission, and our belief in our potential to continue to enhance quality education in our growing school portfolio. This is aligned with our vision of expanding the business into new markets and continuing our long history of growth.”

Iqbal Khan, CEO of Fajr Capital, added “We have greatly valued our partnership with GEMS Education and are very pleased with the outcome of this investment which has enabled us to deliver strong returns to our shareholders and consortium partners. Today’s announcement marks Fajr Capital’s third successful recent divestment and builds on our strong track record of investing in high-quality businesses across the Middle East and Southeast Asia. I am grateful to Sunny, Dino, the Varkey family, and our consortium partners for their support and would like to wish everyone at GEMS Education continued success in the future.”

Andrea Valeri, Senior Managing Director at Blackstone, said “We are proud to have partnered with Sunny, Dino and the Varkey family over the past five years to support the growth of GEMS Education. Together we have invested over US$1 billion to double the size of the business while maintaining a focus on academic excellence. The investment is a great example of a successful partnership with an entrepreneur and his family where Blackstone was able to provide meaningful capital to enable accelerated and sustainable growth. Sunny, the Varkey family and GEMS Education all have our best wishes for their future endeavours.”

Mahmood H. Alkooheji, CEO of Mumtalakat, explained “Over the last five years, GEMS Education has invested over US$1 billion in expansions and enhancements, in addition to investing in a wide portfolio of fourteen schools in KSA and four schools in Egypt through joint ventures, providing more young people with quality education than ever before. Our investment in GEMS Education was a reflection of our outlook on the education sector and our interest in strong companies with forward-thinking management teams.”

Fajr Capital, Blackstone, and Mumtalakat were advised by Rothschild & Co, Morgan Stanley, Credit Suisse and Gibson, Dunn & Crutcher LLP.