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Private Investment Opportunities In Education Booz And Company Bfe Mena 2011
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Private Investment Opportunities In Education Booz And Company Bfe Mena 2011 Private Investment Opportunities In Education Booz And Company Bfe Mena 2011 Presentation Transcript

  • Booz & Company This document is confidential and is intended solely for the use and information of the client to whom it is addressed. Abu Dhabi, October, 2011 Market Overview A Decade of Opportunity The Coming Expansion of the Private School Market in the GCC
  • The GCC private school market today has 1.4M students, projected to grow to 2.6M students by 2020 10/27/11 Source: Booz & Company analysis 2010 GCC K-12 Private School Enrollment (000’s, Nationals and Expatriates) 76 (6%) Qatar 177 (13%) Abu Dhabi 191 (14%) Dubai 198 (14%) Kuwait 725 (53%) Saudi Arabia Total = 1.4M Projected 2020 GCC K-12 Private School Enrollment (000’s, Nationals and Expatriates) Total = 2.6M 120 (5%) Qatar Dubai Kuwait Abu Dhabi 290 (11%) 255 (10%) 1,680 (64%) Saudi Arabia 271 (10%)
  • The GCC private school market’s tuition spend is currently US$5.2 billion, projected to grow to US $16.8 billion by 2020 10/27/11 Source: Booz & Company analysis 1,210 (7%) Qatar 1,610 (10%) Abu Dhabi 2,143 (13%) Dubai 2,562 (15%) Kuwait 9,280 (55%) Saudi Arabia Projected 2020 GCC Private School Tuition Spend (US $M) Total = US $16.8B 433 (8%) Qatar 550 (11%) Abu Dhabi 843 (16%) Dubai 1,109 (21%) Kuwait 2,241 (43%) Saudi Arabia 2010 GCC Private School Tuition Spend (US $M) Total = US $5.2B
  • Population growth, higher national enrollment rates, and shifts to higher fee segments will drive the market’s growth GCC Private School Market Growth ILLUSTRATIVE 10/27/11
    • Increasing share of total enrollment going to private schools due to regulatory and policy shifts in key markets
    12.5% CAGR Expatriates Nationals
    • Natural population growth amongst Nationals
    K-12 Population Private School Enrollment Rate Market Growth Drivers US$ B 2020 16.8 6.5 Inflation 2.7 Shift to Higher-Fee Segments 4.8 Private School Enrollment Rate 2.4 K-12 Population 1.7 2010 5.2 2.8 Source: Booz & Company analysis
    • Tuition fee increases due to economic growth and resourcing pressures
    • Migration of Nationals from public and low-fee private schools to higher-fee private schools
    • Increased share of knowledge economy expatriates seeking highly-resourced schools
    Shift to Higher Fee Segments
  • The GCC private school landscape is not homogeneous - there is a wide variety of curricula and tuition fees 30.5% 10/27/11 Note: Low-Fee schools offer tuition levels of <$US 3.2K; Mid Range schools offer fees of $US 3.2K- $US 8.1K; Top Range schools offer fee levels of >US $ 8.1K Source: Booz &Company/YouGov Siraj survey, Booz & Company analysis GCC Private School Landscape (Segment by Curricula, Tuition Fee Level) Tuition Fee Range Top Range Mid Range Low-Fee MoE Western Asian Curricula 7.9% 1.8% 30.4% 1.3% 25.9% 10.1% 22.6% Abu Dhabi Market Overview (Enrollment by Segment) Dubai Market Overview (School Distribution by Segment) 0.8% 0.8% 28.2 % 2.3% 10.7% 9.9% 16.8%
  • Individual markets are at varying stages of maturity 10/27/11 Factor Source: Booz & Company analysis GCC Private School Market Life Cycle AD USA Australia Kuwait Qatar Dubai ILLUSTRATIVE KSA Introduction Growth Maturity
    • Low demand
    • Fragmented supply
    • Emerging regulatory system
    • Rapid demand growth
    • Products maturing, networks evolving
    • Evolving regulatory system
    • Stable demand
    • Differentiation of products
    • Mature regulatory system
    Demand Supply Regulations
  • GCC governments have taken several significant steps to support the private school market in recent years 10/27/11 Source: Booz & Company analysis, relevant ministries NON-EXHAUSTIVE UAE (Dubai) Private School Market Support from GCC Governments
    • Direct equity investment in private school market
    • Provision of inspection information
    • Land provision for selected schools
    • Free textbooks for selected schools
    • Voucher program for Qatari Nationals
    • Free textbooks, stationery, health services, electricity and water
    Saudi Arabia
    • Regulation enabling Nationals to attend international schools
    • Financing support for new schools
    • Support for national teacher salaries
    Market Market Support Developments UAE (Abu Dhabi)
    • Business development promotion
    • Licensing process development
    • Land provision
  • The emergence of school networks within the GCC Private School market highlights two distinct geography-based operator strategies 10/27/11 Source: Booz & Company analysis GCC Private School Networks (by Market Scope and Geography) Saudi Arabia UAE Kuwait Geography Pan-Regional Local Players National Curricula Local Players International Curricula Market Scope Qatar NON-EXHAUSTIVE GEMS SABIS Ma’arif Al Rowad Taaleem IPE SAMA ALDAR Newton ENS Universal Future Education Pan-Regional Operators Single-Geography Operators
  • GCC Parents are clear in what they want from private schools 10/27/11 Most Critical School Attributes (August 2011 Parental Survey, n = 1,016) Note: Attributes rated as “Very Important” by 70% or more of respondents Source: Booz &Company/YouGov Siraj survey, Booz & Company analysis Quality Teachers (90%) Curriculum (81%) Reputation (81%) 1 2 3 Environment for Children (80%) Preservation of Culture (74%) Value for Money (70%) 4 5 6
  • GCC National Parents demonstrate a clear preference for single-gender education and specific curricula 10/27/11 GCC National School Gender Preference (August 2011 Parental Survey) Note: Answers to Questions 6B, 6C, 12, and 13 from Booz&Company/YouGov Siraj survey; sample size = 555 Source: Booz &Company/YouGov Siraj survey, Booz & Company analysis Current Considered GCC National School Curricula Preference (August 2011 Parental Survey) Current Preferred 4% 2% 52% 41% 1% 26% 12% 54% Single Gender No Reply 9% Mixed Gender /Separate Classrooms Mixed Gender 65% 26% 8% 4% 36% Indian 2% 6% No Reply Western 1% Other 56% Arabic/Gov’t
  • Significant obstacles must be overcome for the market to reach its full potential 10/27/11 GCC Private School Market Challenges Source: Booz & Company analysis Insert Text Here
    • National teachers preference for Government schools limits teacher supply
    • Competition for talented expatriate teachers limits quality and increases cost
    Shortage of Qualified Teachers Human Capital Difficult Access to Land
    • Land prices in freehold markets reduce investment return
    • Land process is often timely and complex in non-freehold markets
    Inputs Opaque Regulations
    • Unclear regulatory environment and inconsistent application of regulations in some jurisdictions chills investor appetite
    Regulatory Environment Lack of Scale and Professional Management
    • Fragmented markets impede scale necessary for efficiencies
    • Sole operators often lack management capabilities
    Difficult Financing Environment
    • Lending practices impede operator ability to secure leverage necessary to finance capital expenditures
    • Lack of debt financing increases cost of capital
    Lack of Market Data
    • Lack of accurate market data increases investors’ risk
    • Lack of information concerning school quality hampers parental choice
  • The GCC Private School market can realize its full potential – If stakeholders work together 10/27/11 GCC Private School Market Recommendations Source: Booz & Company analysis
    • Proactively engage regulators to directly communicate needs and challenges
    Engage Regulators
    • Market roll-up to consolidate existing players to realize efficiencies
    • Consolidate multiple small schools into larger single schools to achieve necessary scale
    Consolidate Market
    • Institute best practice management structures and procedures
    • Identify strategic model and align offerings
    Professionalize Management Investors & Operators Government
    • Work with financial institutions to increase debt capital available to investors
    • Consider direct intervention if market unable to provide sufficient capital
    Facilitate Capital Access
    • Engage potential investors to promote market opportunities and address regulatory uncertainties
    • Increase market information available to parents
    Increase Regulatory and Market Transparency
    • Provide clarity surrounding property ownership requirements and zoning
    • Coordinate with urban planning agencies to ensure sufficient quantity, location, and size of land plots
    Provide Access to Land