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Mashreq leads record $3.25b sustainability-linked financing for GEMS Education

Funding aims to boost sustainability within the education sector

Mashreq, a leading financial institution in the Mena region, led a groundbreaking $3.25 billion leverage buyout sustainability-linked financing for GEMS Education, one of the world’s largest K-12 education providers.

Dubai-based Mashreq has spearheaded the landmark initiative as the lead sustainability coordinator, initial mandated lead arranger and bookrunner, account bank, global agent, and conventional facility agent. The banking consortium also included prominent regional banks such as Dubai Islamic Bank (DIB), Abu Dhabi Commercial Bank (ADCB), and First Abu Dhabi Bank (FAB).

The financing package for the Dubai-based leading educational group came weeks after a consortium led by Brookfield Asset Management has signed a binding agreement to invest in the private school provider. Financial details weren’t disclosed, but Bloomberg News has previously reported that the Canadian firm was looking to invest about $2 billion. That would make the transaction one of the largest private equity deals in a closely held business in the Gulf.

In a statement, Mashreq said the financing package is poised to act as a significant catalyst for ongoing advancements in integrating sustainability within the education sector. Through this inaugural sustainability-linked facility, Mashreq supports GEMS Education in its strategic journey towards enhanced sustainability and educational excellence. “Mashreq’s commitment to sustainable financing is evident in its ambitious target to finance and facilitate $30 billion in sustainable financing by 2030.”

Sunny Varkey, founder chairman of GEMS Education, said sustainability is more than a core value at GEMS. It is an integral part of our strategic vision. “By partnering with Mashreq to secure this innovative financing structure, we can advance our sustainability objectives and align our educational offerings with global environmental standards. This collaboration enables us to provide high-quality, inclusive, and environmentally conscious education, ensuring we meet our long-term sustainability goals.”

Ahmed Abdelaal, group CEO of Mashreq, said the landmark transaction not only underscores Mashreq's leadership in Sustainable Finance but also sets a new standard for the education sector. “By linking financial incentives to sustainability performance, 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.”

The facilities include key performance indicators (KPIs) to track ambitious sustainability performance targets (SPTs), centered around 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) program, and developing a scholarship program 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.

On June 18, 2024, a local bank consortium, including Mashreq, provided underwriting and pre-funded 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.

Founded by the Varkey family in 1959, GEMS Group is headquartered in Dubai and is a leading K-12 private education provider in the UAE. The group educates over 135,000 students across 61 schools in the UAE (42), Qatar (2), and Europe (17), and offers auxiliary services in school transport, facility management, catering, and school uniforms