Education Financing – DIB/Mashreq US$3.25bn Facility

DIB/Mashreq-led Consortium Arranges Landmark US$3.25bn Hybrid Islamic/Conventional Sustainability-linked Financing Facility for GEMS Education to Part Fund a Leveraged Buyout

A consortium of UAE-based banks, led by Dubai Islamic Bank (DIB) and Mashreq, arranged a landmark US$3.25bn Leveraged Buyout Sustainability-linked financing facility for GEMS Education, the largest kindergarten-to-grade 12 education provider in the private sector in the world. The facility is a hybrid Islamic/conventional transaction, albeit the split nor the pricing or tenor were revealed by the client or the consortium banks.

The facility was underwritten by a UAE bank consortium led by DIB and Mashreq, with the former responsible for the Islamic tranche and Mashreq acting as Lead Sustainability Coordinator, Initial Mandated Lead Arranger and Bookrunner, and Conventional Facility Agent. DIB underwrote and committed to over 50% of the financing transaction, marking it one of the largest private sector commitments by the Bank to date. This financing, along with the investment by a consortium of regional and international investors led by Brookfield Asset Management has enabled GEMS to refinance its existing debt and exit most of the position of minority shareholders.

This process started on 18 June 2024, when the two lead managers coordinated with GEMS to establish the rest of the underwriting consortium with Abu Dhabi Commercial Bank (ADCB), and First Abu Dhabi Bank (FAB) joining in the transaction as underwriters and MLA’s and prefunded the multi-billion-dollar facility. In partnership with Brookfield, the syndication of banks facilitated the exit of the majority position held by existing shareholders, including CVC Capital Partners, and refinanced GEMS’ existing indebtedness. The bank facility will subsequently be syndicated in the primary loan market.

This financing package, according to the consortium, is poised to act as a significant catalyst for ongoing advancements in integrating sustainability within the education sector. DIB and Mashreq led the transaction, commencing discussions with the group in 2023 to develop alternatives towards refinancing their existing debt and create the financial framework enabling the exit of existing minority shareholders. The formation of an underwriter group comprising only UAE banks, says DIB, demonstrates the depth of the liquidity pool and underwriting capability for complex transactions available in the local banking market.

According to Dr. Adnan Chilwan, Group Chief Executive Officer at DIB, the deal was the largest leveraged buy-out transaction in the region, reflecting the Bank’s strong structuring and underwriting capabilities. “DIB’s pivotal role in putting this deal together over a period of several months highlights the depth of its relationship with key clients like GEMS and its ability to bring in and manage multiple stakeholders in what has been a very complex transaction. We remain committed to UAE’s growth and sustainability agenda by supporting pivotal sectors such as education, which are crucial to the nation’s long-term socio-economic development.”

Similarly, Sunny Varkey, Founder of GEMS Education, commended the successful closure of the financing package aimed at propelling GEMS towards sustainable growth. “This will enable us to continue our mission of providing world-class education in the UAE and beyond. DIB has been a long-standing partner for GEMS and the Varkey Group and has been engaged with us on this complex financing transaction since 2023. This financing underscores our commitment to creating long-term value for our stakeholders and making a positive impact on the planet and the communities we serve,” he added.

The facilities include key performance indicators (KPIs) to track ambitious sustainability performance targets (SPTs), centred around the UN Sustainable Development Goals 4 and 7. These KPIs focus on increasing the share of renewable energy in school operations, certifying teachers in climate and environmental related topics through the United Nations Climate Change (UNCC) programme, and developing a scholarship programme to ensure diversity and inclusion across schools. In addition, GEMS has committed to a long-term improvement plan targeting resource management and reporting, aligning with its goals of promoting quality and inclusive education.

“By linking financial incentives to sustainability performance,” explained Mashreq CEO, Ahmed Abdelaal, “we are supporting GEMS in its commitment towards environmental and societal advancements. This strategic partnership exemplifies our commitment to fostering sustainable growth and enabling our clients in achieving their broader impact objectives.”

Share this post