Dubai GEMS Education Obtains $545 Million Loan for Expansion

GEMS Education Ltd., the Dubai- based privately owned provider of school education, obtained a 2 billion-dirham ($545 million) loan to refinance investments and provide funds for Middle East and North Africa expansion.

The six-year facility with Islamic and conventional parts was arranged by Abu Dhabi Islamic Bank (ADIB) PJSC, Mashreqbank PSC (MASQ), Dubai Islamic Bank PJSC, (DIB) and Noor Islamic Bank, the Dubai-based company said in an e-mailed statement today. United Arab Bank (UAB) participated in the facility.

GEMS Education’s fundraising comes as a rebound in Middle East economic growth prompts companies to return to the debt market after the global financial crisis cut access. Companies in the Middle East and North Africa have raised $26 billion via syndicated loans and bonds so far this year compared with $18 billion in the same period in 2011, according to data compiled by Bloomberg.

“Recently we announced our intention to build 10 new schools in the U.A.E. over the next two years to meet growing demand,” GEMS Education’s Chief Operating Officer Dino Varkey said in the statement. “This new bank facility supports this expansion plan.”

GEMS Education has seized upon growing demand for private education since 1980, when Dino’s father and current GEMS chairman, Sunny Varkey, took over the business his parents established in 1959 and started opening new schools. At the time, GEMS operated one school with 300 students. Currently, it provides education to 130,000 students across four continents.

The company also employs 11,000 people and offers a variety of curricula -- including American, British, Indian and International Baccalaureate -- charging fees ranging from $750 a year to $40,000 a year to serve different income segments. GEMS Education makes about $500 million in revenue a year and is the biggest privately owned provider of school education, Varkey told Bloomberg News last month.

The burgeoning private school industry has attracted the attention of investors. The Abraaj Group, the Middle East’s biggest buyout fund, bought 25 percent of GEMS in 2007, restructuring the stake five years later into a three-year convertible loan instrument, according to Abraaj’s 2011 annual report. GEMS Education’s operating profit more than doubled during Abraaj’s holding period, according to the report.

To contact the reporter on this story: Shaji Mathew in Dubai at shajimathew@bloomberg.net

To contact the editor responsible for this story: Riad Hamade at rhamade@bloomberg.net

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