Ed InvestmentEd TechInterviews

How to better harness finance to deliver the region’s educational programmes

Please tell us a little about yourself and your company
I’m a Managing Director with Parthenon-EY where I lead all work in education in the Middle East. We’ve advised clients in over 80 countries across the spectrum of education segments from early education to K-12 to post-secondary. We work with clients to develop growth strategies and advise on areas such as market entry, operational improvement, investment decisions, and performance optimization.Ashwin quote

What are the biggest trends you see in education investment in the MENA region?
K-12: K-12 continues to be the most popular segment for investors in MENA as in many markets and demand particularly for premium international schools outpaces supply. Investors are looking to understand the best configuration particularly curriculum to best meet parent preferences across a variety of markets.

  • Transnational Education: In both K-12 and higher education, Western brands continue to be a popular option for parents/students as well as regulators looking to diversify their options. MENA is strategically located to also develop itself as a hub to enrol students at foreign branch campuses who may not want to pay full fees at the home campuses in the US, UK, or Australia. Investors have seen these trends and are looking at how to bring in the best models to fit demand. A recent trend has been for non-Western models to look to enter the UAE to attract Arab students from around the region.
  • Innovation: Globally, investors are looking for innovative models for investment. From affordable schooling to new models of student financing, investors are considering how to bring innovative models to the Middle East and how to adapt global models to best fit local requirements

How does this compare to global markets?
Globally, the popular sector for discussion is education technology. However, we have not seen this gain much traction yet in the Middle East. Markets that have been successful in education technology such as Brazil and the US have developed models that complement traditional learning instead of trying to use technology as a substitute. Several operators are trying to expand their models to MENA but still need to configure options that best sit the local context. Regulators in Dubai continue to successfully promote it as a destination, making it a more viable destination for many operators and investors to consider investment in compared to other regions that make the process long and complicated.

To what extent do you think regional financial instability from oil price fluctuations will impact the education investment market?
Education has proven to be a stable sector despite market fluctuations. For instance, despite economic turmoil during 2008’s recession, K-12 enrolments continued to grow. While expat growth does affect school enrolment, we expect to continue to see growth as governments focus on diversifying away from oil and continue to focus on bringing in expat labour for other events like Dubai Expo 2020.

What are investors’ motivations generally when investing into education?
Many investors have standard motivations of strong financial returns. Education, particularly K-12 and higher education have many beneficial characteristics for investments including negative working capital, long-term revenue visibility, and demand greater than supply. The segments also offer high barriers to entry and prices rising higher than inflation. In addition to traditional motivations, many investors are also attracted by the inherent social nature of the segments. However, for most investors in the region, this tends to be a secondary benefit as opposed to the primary motivation for investments.

Ashwin Assomull, Managing Director, Parthenon-EY

Leave a Reply

Your email address will not be published. Required fields are marked *