Basil M.K. Al-Ghalayini

The education sector has been one of the main pillars of the Saudi Vision 2030 reform plan, with a special focus on enabling the private sector to play an active role in developing it. The private sector includes local players such as quasi-government institutions, and international ones.

Recently, the Saudi Arabian General Investment Authority (SAGIA) signed multiple agreements with various private sector participants. Among them is the Advanced Schools Co., which aims to develop and market investment opportunities worth SR2.9 billion ($773 million) in coordination with the Education Ministry and other relevant authorities.

Through Vision 2030, the country is committed to increasing private sector participation in the education sector. Several initiatives to unlock the sector for private investments are underway, with some having already been implemented.

These include the acceptance of 100 percent foreign-owned educational institutions, and the use of public education buildings for private schools, hence removing the challenge of accessing capital, land and obtaining permits to establish infrastructure.

Saudi Arabia’s private schools are expected to account for the lion’s share of growth in the Gulf Cooperation Council region. The private education market is expected to reach $12 billion in the next three years. This growth will be fueled by the increased shift toward privatization and consolidation among private schools.

The Advanced Schools Co. agreement, which was arranged via the Invest in Saudi platform, includes various transactions in the education sector with a total value of SR2.9 billion. The agreement includes creating a development company to build, operate and maintain 58 educational centers for three academic years, serving up to 70,000 students and creating 5,000 employment opportunities.
An agreement with Adeem Capital is considered to be a new trend in financing the education sector. Adeem Capital will be the adviser and arranger for the issuance of sukuk (Islamic financial certificates) worth SR1 billion.

Observing and analyzing market dynamics and trends in the education sector, BMG Financial Group often receives enquiries by owners of private schools nationwide who want to explore initial public offerings via the Saudi Stock Exchange (Tadawul) or the parallel market, consolidation through mergers and acquisitions, or just secure financing for their expansion.

To date, most of these transactions are taking place in Riyadh and the central region. So in the long run, the sky is the limit for investment opportunities in the education sector in other regions across the Kingdom.

Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.

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