The vision of Sunny Varkey, chairman of international education enterprise, GEMS Education, is simple; to provide quality education to as many children in the world as possible. Transforming a vision into reality, however, is a far more complex affair. Approximately one billion youth walk the earth today. Of that billion, more than 10% are illiterate according to the United Nations, while 61 million primary school-aged children are out of school. Today’s vital statistics tell a tough tale, but for the man born into a household of education professionals, 50 years of family-led success tell him otherwise. Through ambitious expansion plans spanning continents and curricula, the Indian “edupreneur,” as he humorously terms himself, is educating the masses, turning a handsome profit as he goes.
“Education is my passion, it is in my blood,” asserts the devoted chairman. Financial gain may be secondary for the Dubai-based family business, but passion apparently pays. With a network of schools educating in excess of 130,000 students from more than 150 countries, GEMS Education, the largest K–12 private education provider in the world, achieved revenues of $475 million last year, with annual EBITDA growth of 25%. Forecasting even higher growth over the next decade, 56-year-old Varkey is hungry for funds.
“We are seeing unprecedented demand for high quality schools in emerging economies,” explains the entrepreneurial Indian whose venture into the world of education began in 1980, when he took the helm at the school established by his parents in 1968. Welcoming an initial intake of 27 children, the school now hosts over 10,000 thanks to Vareky’s drive and commercial eye.
According to the devoted educator, 18 different countries have been in contact over the past three months alone, keen to offer their youngsters the GEMS experience. To meet rising demand, Varkey and his senior management team, which includes his sons Dino and Jay, aims to raise between $650 million and $1 billion in the next five years.
Already, in April this year, GEMS Education raised bank financing to the tune of AED 2 billion ($544.3 million). The six-year facility composed of Islamic and conventional tranches was led jointly by some of the UAE’s most prominent banks: Abu Dhabi Islamic Bank, Mashreq Bank, Dubai Islamic Bank and Noor Islamic Bank, with United Arab Bank also involved. “The facility raised will be used to refinance our investment in schools made over the last three years and to provide additional funds for the investment in new schools in the UAE and wider MENA region,” remarks Varkey, adding that 10 new schools are planned for the UAE over the next two years.
Underpinning GEMS Education’s ambitious expansion is a three-pronged approach. From long standing private sector ventures, including fully-owned and operated schools catering to a range of curricula and budgets (annual school fees currently range from $750 to $40,000) to partnering with governments to deliver high quality public education, Varkey’s educational endeavors cover all bases. Meanwhile, the Varkey GEMS Foundation—the third string to the GEMS bow—grows ever stronger.
Established in 2010 with former US President Bill Clinton as honorary chairman, the non-profit-organization has a mandate to improve education for underprivileged children, pledging that for every child enrolled at a GEMS school, 100 disadvantaged children will benefit. “This means that right now, we have a target to help over 10 million children and, in the coming years, this will rise to impacting tens of millions,” explains Varkey.
From student scholarships to teacher training, the foundation seeks to reach those families unable to meet the cost of education. Turning goodwill into tangible financial results, the GEMS community has raised $40 million for charity so far.
Charity fundraising in the multimillions of dollars suggests that the need is great, not least in the Middle East. Cliché it may be, but in a region where young people account for over half of the total population—children under the age of 15 account for 30.2%—the youth of today is indeed the future of tomorrow. Necessity for high quality education and improved access to schools has never been greater, and the appetite is there too.
Across the Middle East and North Africa, primary and secondary school enrollment (net) stood above world averages in 2011 at over 92% and 69%, respectively, while youth literacy currently exceeds 90% according to World Bank data. Meanwhile, a report from Booz & Company entitled A Decade of Opportunity: The Coming Expansion of the Private-school Market in the GCC claims that the K–12 public and private education market in the GCC could reach $90 billion and 8.25 million students by 2020.
Rising to the occasion, public and private entities alike are investing heavily in education. Across the region, public expenditure on the sector hovers around 18.6% of total spending, next to a global average of 14.2%. In Saudi Arabia, the government has pledged $54.4 billion to education and training. In Oman, this figure stands at $3.38 billion, while the UAE has allocated 26% of its national budget to education, health, housing and social development.
On the private scene, education investment opportunities are there for the taking. Booz & Company’s report places the GCC private school market amongst the largest in the world, with around 1.36 million students enrolled in approximately 4,400 private schools. Sunny Varkey, it seems, is in the right place at the right time.
“Governments across the GCC are acutely aware of the need to provide a high standard of education and many are now working with the private sector in private-public partnerships to achieve their objectives,” explains GEMS Education’s chairman. “I really think this is the way of the future,” he asserts.
Private sector involvement, of course, comes with a cost that can hit families hard. Booz & Company estimates that the GCC rakes in a whopping $5.2 billion in annual tuition. In Dubai alone, average annual private school fees totaled more than $4,670 per student in 2011 according to Dubai’s Knowledge and Human Development Authority. Varkey, however, stands solidly behind education in the Emirates, despite the price tag: “Personally I believe parents are extremely lucky to have their children educated in the UAE.”
Doing their part to ensure both choice and quality of educational offerings, a large number of GEMS international schools are registered with Cambridge International Examinations (CIE), the world’s largest provider of international education programs and qualifications for youngsters from the age of five to 19 years.
“GEMS has established a reputation for academic excellence, as shown by the annual GEMS award ceremony in the UAE at which Cambridge Outstanding Learner certificates are distributed to GEMS students,” explains a representative for CIE.
With CIE counting as just one of an array of top notch international programs, Varkey explains, “The standard of education [in the UAE] is equal to most developed countries worldwide and families have the choice to choose the school they can afford and the curriculum they want.”
He should know. From a young age, Varkey learned the Emirati school systems inside-out under the watchful eye of his parents who began their UAE life teaching English before establishing their first school. When the time came for Varkey to take charge of the family business, the Emirates was growing fast.
“A lot of nationalities were coming into the country so we had to find a solution to the different educational needs of the community,” he recalls. “That is how we came up with the idea to establish a range of different schools at different price points and curricula.”
Today however, as a global education provider, Varkey’s interests extend well beyond Dubai; the business-savvy education leader is thinking big. With 15 schools currently under construction in seven countries, the chairman is well on his way to achieving his target of 18 countries in two years. But he isn’t content to stop there; plans are in the works to reach between 40 and 50 countries within five years, focusing primarily on Africa, Southeast and East Asia, and India. Potential, explains Varkey, also exists in the UK and US.
Given his strong relationships with government, private and public sectors, GEMS Education’s leading man predicts good things to come; “Our future is bright. So too is the future of the many young people we are educating.” But with rapid growth, sizable investment and increasing demand, to say that the future looks bright would appear an understatement. In fact, Varkey dares to label education as “almost recession-proof.” Qualifying his bold assertion, he explains that the call for quality education will go on as the middle class continues to grow in emerging economies.
With grand plans to meet surging needs, Varkey’s vision appears within reach and in safe hands. Just as Varkey was ready to continue the legacy of his parents back in the 1980s, his own sons are prepped to carry GEMS into the future, much to their father’s delight. “I am extremely happy that both my sons have decided to get involved in the business. We are now a third generation education family,” he beams.
But family loyalty alone isn’t enough to see an enterprise triumphantly through 50 years of educational and enterprising achievement. Unrelenting family dedication that has accompanied the GEMS story from 1960s Dubai to current-day global success has been met step-by-step by hard graft and determination. Ever the entrepreneur, Varkey’s parting advice for students and impresarios alike is as clear and simple as his vision, “Never give up.”