{"id":543403,"date":"2022-01-31T03:50:50","date_gmt":"2022-01-31T03:50:50","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/blackboards\/what-is-egypts-education-management-landscape-and-how-is-it-growing\/"},"modified":"2022-01-31T03:50:50","modified_gmt":"2022-01-31T03:50:50","slug":"what-is-egypts-education-management-landscape-and-how-is-it-growing","status":"publish","type":"blackboard","link":"https:\/\/enterpriseam.com\/egypt\/blackboards\/what-is-egypts-education-management-landscape-and-how-is-it-growing\/","title":{"rendered":"What is Egypt\u2019s education management landscape, and how is it growing?"},"content":{"rendered":"

<\/a> What is Egypt\u2019s education management landscape, and how is it growing?<\/strong> The growth of dedicated education management companies is an accelerating trend within Egypt\u2019s private sector education system, multiple education leaders have observed recently. Some believe<\/a> it makes expansion easier for schools and operators. Today, in part one of this two-part series, we look at the education management companies active in Egypt, and how they\u2019re growing.<\/p>\n

What exactly is an education management company? Put simply, it\u2019s an organization that manages schools, operationally and academically<\/strong> \u2014 often under a for-profit model<\/a>. These companies might own and operate schools in their portfolio, or they could be school operators managing schools owned by other investors.<\/p>\n

There are different kinds of education management <\/strong>compan<\/strong>ies operating in Egypt<\/strong>, notes Tammam Abushakra, advisor to the chairman of Esol Education<\/a>, which owns and operates AIS, AIS West, and CES in Egypt, as well as seven schools in other countries. \u201cThere are entities like ours that began with an educator establishing one school which grew gradually and organically over time to become a multinational group of schools,\u201d Abushakra tells Enterprise. Other companies begin as investment vehicles, with capital deployed to finance the acquisition of preexisting schools, or \u2014 less commonly \u2014 the establishment of new schools. These tend to be larger and grow more quickly, he adds.<\/p>\n

Education management companies could be homegrown or foreign: <\/strong>\u201cSome prominent education management companies have emerged within Egypt and some foreign companies are now active in Egypt,\u201d says Abushakra.<\/p>\n

Different companies could have different investment focuses: <\/strong>\u201cSome education management companies with access to capital choose to invest in real estate, and others prefer to invest only in school operating companies that lease their campuses from real estate owners. There are also companies, or funds, that invest in school campuses but not in school operations,\u201d Abushakra adds.<\/p>\n

The number of education management companies in Egypt, and the variation in their nature and structure, has grown considerably in recent years <\/strong>\u2014 though it\u2019s difficult to know precisely how many are active here, Abushakra says.<\/p>\n

We do know of at least five others: <\/strong>Egypt\u2019s two branches<\/a> of the International School of Choueifat are operated by education management company SABIS. CIRA subsidiary Eduhive<\/a> manages BCCIS, Regent British School, Saxony International School (SIS), and Swiss Ecole Lemania. The Dr. Nermien Ismail Language Schools (NIS) are operated by<\/a> education management company Advanced Education for the Establishment, Management, and Ownership of Educational Facilities<\/a>. BalancED Education Company<\/a> owns the New Generation International School in Obour and Asten College in Taj City. And the Egypt Education Platform (EEP)<\/a> manages the assets of the Egypt Education Fund, a 50\/50 JV established in 2018<\/a> between EFG Hermes and GEMS Education to invest in Egypt\u2019s K12 education sector. EEP currently has eight schools<\/a> on its portfolio.<\/p>\n

To clarify: EEP is the rebranded GEMS Education Egypt<\/strong>, the Egyptian management company that was set up to manage the four GEMS schools<\/a> initially established in Egypt under the EFG-GEMS JV, notes EEP Director of Communications Amr Sherif. EEP has different streams, one of which is the GEMS Education Egypt stream, notes Sherif.<\/p>\n

Egypt has roughly six new education management companies in the pipeline<\/strong>, estimates Eduhive CEO Karim Mostafa, without giving further details about the names or owners of these companies. Overall, the education management landscape in Egypt is still fairly new, but demand for these services is high, he adds.<\/p>\n

The precise nature of education management partnership models can vary considerably, <\/strong>sources note. \u201cIt all depends on the structure of the agreement and the nature of the partnership,\u201d says BalancED Education Managing Director Salma El Bakry. \u201cWe might have total ownership or might operate the school, without owning the asset.\u201d Other options include JVs, property rentals or revenue-sharing agreements, she adds.<\/p>\n

The most common model is probably one where an investor has land or a building, wants to set up a school, but doesn\u2019t have the know-how,<\/strong> EEP CEO Ahmed Wahby tells Enterprise. \u201cWe then present what we believe is the right model to address this demand, creating a [mutually beneficial setup] for us and the investor.\u201d<\/p>\n

Some investors choose to fully outsource all logistical issues: <\/strong>Eduhive frequently works with investors that want fully-fledged school management solutions, says Mostafa. Then, the company has two roles: Pre-operation and operational.<\/p>\n

This can mean tailoring a proposed business model, according to investor need:<\/strong> Eduhive\u2019s pre-operation activities include extensive research, examining land allocation, curricula, and price points to create a business model that makes financial sense \u2014 which can then be taken to the investor, says Mostafa. Then, Eduhive oversees the design, construction, and licensing processes, to get the school up and running. \u201cWe work with consultants on design, hire and supervise building contractors, buy furniture, do all the marketing, teacher hiring and training,\u201d he says.<\/p>\n

But with management systems already in place, companies can also streamline services: <\/strong>EEP has multiple departments, including finance, accounting, procurement, HR, operations, and education. So any new schools joining the platform follow company policies, governance process and education provision, Wahby tells Enterprise. \u201cIt\u2019s simple: We look for prospects relevant to our growth strategy, and our role is then to partner with those assets \u2014 whether by acquiring them, building new ones, or setting up management contracts. When they become part of our platform, we start offering them our management services.\u201d<\/p>\n

Dedicated superintendents might oversee the academics: <\/strong>Every principal at an Eduhive-managed school is responsible for curriculum delivery, and the company has a superintendent who works with the principals and schools to make sure all KPIs are met, says Mostafa.<\/p>\n

How are these companies financed? It depends on the nature of their partnerships<\/strong>, sources note. Eduhive takes a fee \u2014 a fixed-rate percentage \u2014 based on the revenues and net income of the schools it manages, says Mostafa. \u201cSo it\u2019s obviously in our best interest for investors to make a return,\u201d he adds. For EEP, the mechanisms in place for revenue generation vary depending on its relationships with individual schools, says Wahby. \u201cIf we\u2019re getting into a management contract, then we take a percentage. If we own the school \u2014 which in some cases, we do \u2014 then revenue generation is closely linked to the school\u2019s profitability.\u201d<\/p>\n

Next week: <\/strong>We look at what\u2019s driving the growth of education management companies in Egypt.<\/p>\n

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