Lessons in Investment Nrupaditya Singhdeo, CEO of Al Najah Education, is forging ahead with acquisitions across the Middle East and South Asia as the company envisions a bold role in the region’s education sector.
As an investor, what is the potential you see in the region’s education sector for investments? What is the ROI like for such targets?
Our target markets of MENA and South East Asia continue to be one of the largest private education markets in the world. The population of GCC itself is estimated to touch 60 million by 2020 of which number of people below 25 years likely to surpass 22 million. The young population, high disposable incomes and rising number of expatriates make it an attrac- tive market for education companies. We believe the demand for high quality education will increase in the coming years and hence we continue to invest in and add to our portfolio of K-12 schools, pre-schools and nurseries and training institutes in the U.A.E., Oman and Singapore. The ROI on our invest- ments will vary depending on the type of asset and geography.
What value are you planning to set aside for acquisitions in 2017?
New investments will be a function of finding assets that offer a high potential for growth and our ability to negotiate a fair valuation. We have a strong pipeline of investments worth over $150 million which includes schools in Dubai, Abu Dhabi and Sharjah in the U.A.E. as well as schools in Kuwait and Qatar. In South East Asia, we have opportunities to add to our exist- ing base of childcare centres / nurseries and training centres in Singapore
Are you planning to form any new funds to invest in educa- tion over the next few years?
We are looking to grow our education platform, both organi- cally and inorganically, going forward. We believe our core markets (MENA and South East Asia) provide significant op- portunities for growth and we have a healthy pipeline of op- portunities for which we will continue to raise capital.
What are some of the factors that you look at when invest- ing in a school in the region? Have the regulatory measures (which varies from country to country in the GCC) ever posed a problem in your investment plans?
There are several macro and micro factors that we consider before investing in a school. We have a comprehensive due diligence process that includes an analysis of the market size, demographics, location, competitive dynamics and regulatory environment as well as specifics related to the quality of facili- ties, curriculum, student body and the overall growth potential of the school.
The regulators and related government entities (KHDA, ADEC, and Ministry of Education Oman etc.) have done well to put in place policies and guidelines which, we believe, have and will lift the quality of education being offered and attract more investment in the education sector.
Private equity in the Gulf is increasingly described as
a tough industry due to the fact that it is still reaching maturity. How is Al Najah Education performing in such a climate?
Private equity in the Gulf, though challenging, presents a significant opportunity to management teams that are ex- perienced and have the ability to add value to their portfo- lio companies. Al Najah has managed to build a strong and experienced management team and grow to 43 institutions since its inception in 2012. We continue to believe that the Gulf is an attractive market for investing in education. We believe the demand for high quality education will increase in the coming years and hence we continue to invest in growing our business.