{"id":553922,"date":"2021-12-13T03:50:47","date_gmt":"2021-12-13T03:50:47","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/blackboards\/2021-in-review-private-sector-involvement-in-egypts-education-system-soared\/"},"modified":"2021-12-13T03:50:47","modified_gmt":"2021-12-13T03:50:47","slug":"2021-in-review-private-sector-involvement-in-egypts-education-system-soared","status":"publish","type":"blackboard","link":"https:\/\/enterpriseam.com\/egypt\/blackboards\/2021-in-review-private-sector-involvement-in-egypts-education-system-soared\/","title":{"rendered":"2021 in review: Private sector involvement in Egypt\u2019s education system soared"},"content":{"rendered":"

<\/a> 2021 in review Part 1 \u2014 The year private sector education truly emerged:<\/strong> In many ways, 2021 was the private sector\u2019s year for education in Egypt. The year kicked off with the Education Ministry scrapping the 20% cap<\/a> on foreign ownership of schools \u2014 a problem that had raised<\/a> serious concerns among school operators and investors, who feared the decision would deter investors and slow expansion plans in education, one of Egypt\u2019s most promising sectors.<\/p>\n

This set the tone for the rest of the year:<\/strong> Since then, we\u2019ve seen a true partnership emerge between large private K-12 and university operators and the government, whereby the former invests in conjunction with the policy initiatives set out by the latter. New private schools and universities opened up, and even governorate expansion started gathering steam. The private sector worked effectively with the government to boost technical education. Public-private partnerships in large-scale education investment vehicles drew substantial investment. And nothing really says emergence more than an IPO, as higher education platform Taaleem broke our IPO drought in 2021.<\/p>\n

The biggest theme of the year has to be the development of a truly successful PPP model in education, starting with technical colleges. <\/strong>Setting up new technical colleges \u2014 apprenticeship programs merging academics and technical training that offer two-year + two-year degree programs \u2014 was a stated investment priority<\/a> for the Higher Education Ministry in FY2021-2022, with plans underway to launch six new government technical colleges after three were recently established in New Cairo, Quesna and Beni Suef.<\/p>\n

The private sector upped its support for technical colleges in 2021<\/strong>, with CIRA announcing plans to launch<\/a> Egypt\u2019s first private technical college in September 2023, using curricula provided by international partners. Elsewedy, Samsung and Bavaria had previously funded labs at public tech colleges, and Korea Tech University had awarded University Beni Suef University of Technology a grant of USD 5.8 mn. Many players expect private sector interest in establishing new technical colleges \u2014 or building the capacity of tech departments in existing private universities \u2014 to continue growing, they told Enterprise.<\/p>\n

But it wasn't until large-scale investment platforms drew significant investments did public-private collaboration reach new heights.<\/strong> 2021 saw large-scale public-private investment platforms take off in a huge way<\/a>. CIRA and Al Ahly Capital Holding announced the launch of their new EGP 2 bn company<\/a> to invest in middle-income education providers. It joins the CIRA-Elsewedy Capital Holding venture<\/a>, for which the New Urban Communities Authority is allocating land to build the New Damietta university. State-backed Lighthouse Education<\/a> platform recently reached<\/a> a first close of EGP 560 mn, beating its initial fundraising target. And the EFG Hermes Education Fund<\/a> \u2014 set up as a 50\/50 JV between EFG and GEMS Education \u2014 received a EGP 250 mn commitment from the Sovereign Fund of Egypt<\/a>.<\/p>\n

Why was this a PPP education model that beat out what came previously?<\/strong> For one, long-term investment in an education platform beats one-off projects and schools as operators can attract stronger talent and spend more on education development, JV heads tell us. It also allows for investment at scale, which gives operators a diverse and innovative lineup of projects. Financial risks and capex spending is being shared by both public and private entities. And crucially, PPP platforms also afford the investor better options for a successful exit.<\/p>\n

This hasn\u2019t kept private sector operators from expanding on their own, with <\/strong>plans to open<\/a><\/strong> new K-12 schools moving forward. <\/strong>A new branch of the British Columbia Canadian International School (BCCIS) and the first Egyptian branch of Germany\u2019s Saxony International School (SIS) both opened in September, says Karim Mostafa, CEO of CIRA subsidiary Eduhive<\/a>, which manages them. Kent College Egypt, set to open its doors in 2H2022, has already started its admissions process, Chairman Shady Eshra confirms. Egypt Education Platform \u2014 formerly GEMS Egypt \u2014 added multiple schools<\/a> to its international stream, including most recently<\/a> a new branch of Hayah International Academy in West Cairo.<\/p>\n

\u2026Along with universities: <\/strong>2021 saw the establishment of the European Universities in Egypt (EUE)<\/a>, the latest international branch campus<\/a> to successfully set up shop in Egypt. EUE hosts the UK\u2019s University of London and University of Central Lancashire, according to its website. Meanwhile, CIRA and Elsewedy Capital Holding announced in August<\/a> their plans to build and run an EGP 2.5 bn private university in New Damietta, set to open to students in the 2023-2024 academic year.<\/p>\n

And throughout the year, there\u2019s been a buzz of interest from overseas investors: <\/strong>The decision to remove the 20% cap on foreign ownership limits sparked immediate and palpable investor interest, according to sources. One major global investor eyeing Egypt\u2019s education sector is Actis, controlling shareholder of the largest private higher education business in Africa: Honoris United Universities. Honoris is prioritizing an Egyptian entry, Actis partner and Middle East & North Africa chief Sherif El Kholy told us in March<\/a>.<\/p>\n

And what better way to celebrate the emerging powerhouse of private sector education than with a successful IPO: <\/strong>Higher education outfit Taaleem\u2019s April IPO \u2014 Egypt\u2019s first since December 2019<\/a> \u2014 saw its shares rise<\/a> some 6% on the first day of trading. The offering saw 46.55% of the company\u2019s shares placed with institutional investors in a private placement and another 2.45% stake sold to retail investors. The retail portion closed more than 29x oversubscribed, while the offering to institutional orders was 2.34x oversubscribed.<\/p>\n

All in all, a strong case was made in 2021 for the value of private sector investment in education <\/strong>\u2014 for investors, institutions, and the sector overall.<\/p>\n

In Part 2 of our Blackboard Year-in-Review:<\/strong> We look at how the covid-19 pandemic has accelerated the education system\u2019s adoption of new technology, and new learning models with an eye towards meeting the labor market\u2019s needs.<\/p>\n

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Your top education stories for the week:<\/strong><\/p>\n