Brookfield-led group buys into Dubai school operator GEMS

Nicolas Parasie, Bloomberg News Jun 17, 2024

A consortium led by Brookfield Asset Management Ltd. is investing in GEMS Education, a Dubai-based family business founded by Indian immigrants who turned a single school into one of the world’s largest private education providers. 

Financial details weren’t disclosed, but Bloomberg News has previously reported that the Canadian firm was looking to invest about US$2 billion. That would make the transaction one of the largest private equity deals in a closely held business in the Gulf.

The company’s existing minority shareholders, including the Malaysian sovereign wealth fund Khazanah Nasional Bhd., will exit as part of this transaction. The move will also allow CVC Capital Partners to exit a majority of its GEMS stake, five years after it bought into the firm in a deal that marked its first private equity foray in the Gulf. 

CVC remains “fully committed to investing further in this attractive region,” Ozgur Onder, head of the company’s Middle East operations, said in a statement. 

Besides Brookfield, other investors include Dubai-based Gulf Islamic Investments, Marathon Asset Management and the State Oil Fund of the Republic of Azerbaijan, according to a statement. The deal is expected to close in the third quarter, subject to conditions. 

For Brookfield, the transaction marks the latest investment in a region where it has increasingly become active. It recently bought a stake in GII’s logistics unit and sold part of Dubai’s largest office tower to investors from Saudi Arabia and Abu Dhabi.

Separately, GEMS secured funds from a group of Emirati banks to finance the transaction, including for the repayment of the firms’ existing arrangements. 

Two-year saga

The group’s roots date back to 1959 when founder Sunny Varkey’s parents moved to Dubai from Kerala in southern India. Today, more than 135,000 students are enrolled at over 40 GEMS schools in the United Arab Emirates.

Its expansion over the years has mirrored Dubai’s own growth into a major financial hub. Parents in the city, which has a large expat population that boomed in the aftermath of the pandemic, spend large amounts on private education — sometimes upwards of $20,000 a year. 

The transaction brings to an end a sale process that began in 2022. Before that, Varkey tried to sell part of his stake in 2020, but failed to draw buyers as the pandemic spread. The firm also pursued a London initial public offering but those plans didn’t materialize. 

“The investment in GEMS marks a milestone for Brookfield and our private equity business in the Middle East, underscoring our commitment to investing in this high-growth region and the strength of our local partnerships,” said Jad Ellawn, Managing Partner and Regional Head of Brookfield in the Middle East.

Brookfield invested through its special investments and Middle East private equity programs. 

GEMS Education was advised by deNovo Partners — a Dubai-based boutique founded by former Morgan Stanley banker May Nasrallah — and Goldman Sachs Group Inc.