Pakistan City Schools Eyes First Education IPO Amid MSCI Review

  • City Schools looking to raise as much as $40 million this year
  • Pakistan has lowest expenditure on education in South Asia

Pakistan’s second-largest private education firm, City Schools (Pvt) Ltd., is considering becoming the first company from the industry to list its shares on the country’s stock exchange.

Established in the coastal commercial hub of Karachi in 1978, City Schools plans to raise as much as $40 million to buy land and real estate to build and expand campuses, Farzana Firoz, founder and chief executive officer, said in an interview in London on Tuesday. The Lahore-based company is mainly considering a private placement and then a listing, and will have a firm plan within eight weeks.

“A good 60 percent of our students aren’t in purpose built campuses, that’s why we’re here,” she said. “What we want to do is consolidate our schools and that means real estate, buying land, making campuses. You owe it to the children to institutionalize the set-up.”

The company runs 192 branches under The City School brand following the U.K. curriculum and teaching more than 65,000 students with average fees of about $200 a month. The potential listing by City Schools on the Pakistani bourse comes amid speculation that MSCI Inc. will upgrade Pakistan to an emerging market from its current frontier status, which may lead to more inflows into its capital markets.

The index provider, which put Pakistan on its review list, is due to announce the results of its consultation on the nation’s reclassification by June 14.

‘Certain Comfort’

“The payback is already built in with the student numbers being there,” Firoz said. “The bankers are also happy to see feasibility like that and it also gives us a certain comfort level as well.”

Despite the expansion plans, Firoz said that private schooling isn’t the solution to the country’s poor education system.

“That’s the upper crust, that’s not the country, that’s not Pakistan,” she said. “The ultimate and final responsibility for this is with the government.”

The total expenditure on education has remained around 2 percent of GDP for the past decade, the lowest among South Asian countries, according to Pakistan’s latest economic survey. Pakistan is ranked second in the number of children out of school at primary level, according to education advocacy group Alif Ailaan’s state of education report 2014. About half the children below the age of 16 don’t go to school.

“The participation of the private sector is not a solution to the problem of education, the biggest provider of education across the world globally is the government and that role cannot be replaced by the private sector,” Firoz said. “It’s like giving cake to the country when they need bread.”

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