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8/3/2019 Chadi Moujaes BFE Speech 12h20
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Booz & Company
This document is confidential and is intended solely forthe use and information of the client to whom it is addressed.
Abu Dhabi, October, 2011 Market Overview
A Decade of OpportunityThe Coming Expansion of the Private School Market in the GCC
8/3/2019 Chadi Moujaes BFE Speech 12h20
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
The GCC private school market today has 1.4M students, projected
to
grow to 2.6M students by 2020
10/28/2011
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%)
1
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
The GCC private school market’s tuition spend is currently US$5.2
billion, projected to grow to US $16.8 billion by 2020
10/28/2011
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 $5.2B
2
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Booz & Company
Population growth, higher national enrollment rates, and shifts to
higher fee segments will drive the market’s growthGCC Private School Market Growth
ILLUSTRATIVE
10/28/2011
Increasing share of total enrollment going to private schoolsdue to regulatory and policy shifts in key markets
12.5% CAGR
Expatriates
Nationals
Natural population growth amongst Nationals
K-12 Population Private School Enrollment Rate
Tuition fee increases due to economic growth andresourcing pressures
Inflation
Migration of Nationals from public and low-fee privateschools to higher-fee private schools
Increased share of knowledge economy expatriates
seeking highly-resourced schools
Shift to Higher Fee Segments
Market Growth Drivers
2.4
10.3
0
5
10
15
20
US$ 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
3
Source: Booz & Company analysis
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Booz & Company
30.5%
The GCC private school landscape is not homogeneous -
there is a wide
variety of curricula and tuition fees
10/28/2011
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 $ 8.1KSource: Booz &Company/YouGov Siraj survey, Booz & Company analysis
GCC Private School Landscape(Segment by Curricula, Tuition Fee Level)
T u i t i o n F e e R a n
g e
TopRange
MidRange
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%
4
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
Individual markets are at varying stages of maturity
10/28/20115
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
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
GCC governments have taken several significant steps to support the
private school market in recent years
10/28/2011
Source: Booz & Company analysis, relevant ministries
NON-EXHAUSTIVE
6
UAE (Dubai)
Private School Market Support from GCC Governments
Direct equity investment in private school market Provision of inspection information
Kuwait Land provision for selected schools Free textbooks for selected schools
Qatar 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
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
The emergence of school networks within the GCC Private School
market highlights two distinct geography-based operator strategies
10/28/2011
Source: Booz & Company analysis
GCC Private School Networks(by Market Scope and Geography)
SaudiArabia
UAE
Kuwait
G e o g r a p
h y
Pan-RegionalLocal Players
National Curricula
Local Players
International Curricula
Market Scope
Qatar
NON-EXHAUSTIVE
GEMS
SABIS
Ma’arif Al Rowad
Taaleem
IPESAMA
ALDAR
Newton
ENSUniversal Future Education
7
Pan-Regional Operators Single-Geography Operators
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
GCC Parents are clear in what they want from private schools
10/28/2011
Most Critical School Attributes(August 2011 Parental Survey, n = 1,016)
Note: Attributes rated as “Very Important” by 70% or more of respondentsSource: Booz &Company/YouGov Siraj survey, Booz & Company analysis
Quality Teachers(90%)
Curriculum(81%)
Reputation(81%)
1 2 3
Environment forChildren
(80%)
Preservation ofCulture
(74%)
Value for Money(70%)
4 5 6
8
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
GCC National Parents demonstrate a clear preference for single-gender
education and specific curricula
10/28/2011
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 = 555Source: 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
/SeparateClassrooms
Mixed Gender
65%
26%
8%
4%
36%
Indian
2%
6%No Reply
Western
1%
Other
56%Arabic/Gov’t
9
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
Significant obstacles must be overcome for the market to reach its full
potential
10/28/2011
GCC Private School Market Challenges
Source: Booz & Company analysis
Insert Text Here
National teachers preferencefor Government schools limitsteacher supply
Competition for talentedexpatriate teachers limitsquality and increases cost
Lack of Scale andProfessional Management
Fragmented markets impedescale necessary forefficiencies
Sole operators often lackmanagement capabilities
Shortage of QualifiedTeachers
Human Capital
Difficult Access to Land
Difficult FinancingEnvironment
Lending practices impedeoperator ability to secureleverage necessary to financecapital expenditures
Lack of debt financing
increases cost of capital
Land prices in freeholdmarkets reduce investmentreturn
Land process is often timelyand complex in non-freeholdmarkets
Inputs
Opaque Regulations
Lack of Market Data
Lack of accurate market dataincreases investors’ risk
Lack of informationconcerning school qualityhampers parental choice
Unclear regulatoryenvironment and inconsistentapplication of regulations in
some jurisdictions chillsinvestor appetite
Regulatory Environment
10
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20111024-BFE Presentationfor CNM v12CNM.ppt
Booz & Company
The GCC Private School market can realize its full potential –
If
stakeholders work together
10/28/2011
GCC Private School Market Recommendations
Source: Booz & Company analysis
Proactively engage regulatorsto directly communicateneeds and challenges
Engage Regulators
Market roll-up to consolidateexisting players to realizeefficiencies
Consolidate multiple smallschools into larger single
schools to achieve necessaryscale
Consolidate Market
Institute best practicemanagement structures andprocedures
Identify strategic model andalign offerings
Professionalize Management
Investors &Operators
Government
Work with financialinstitutions to increase debtcapital available to investors
Consider direct intervention ifmarket unable to providesufficient capital
Facilitate Capital Access
Engage potential investors topromote market opportunitiesand address regulatoryuncertainties
Increase market informationavailable to parents
Increase Regulatory andMarket Transparency
Provide clarity surroundingproperty ownershiprequirements and zoning
Coordinate with urbanplanning agencies to ensuresufficient quantity, location,
and size of land plots
Provide Access to Land
11