Webinar: Private Higher Education in MENA - Lesson and Considerations for Operators and Investors

30
Private Higher Education in MENA: Lessons and Considerations for Operators and Investors Ashwin Assomull October 2015

Transcript of Webinar: Private Higher Education in MENA - Lesson and Considerations for Operators and Investors

Page 1: Webinar: Private Higher Education in MENA - Lesson and Considerations for Operators and Investors

Private Higher Education in MENA:

Lessons and Considerations for

Operators and Investors

Ashwin Assomull

October 2015

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Agenda

Introduction to Parthenon

Global Higher Education Market

Perspectives on MENA Higher Education Market

Opportunities for Growth- Dubai Example

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Overview and Capabilities

• Consumer Growth

• Education

• Healthcare

• Industrials

• Information & Media

• Private Equity

• Change Management and Implementation Support

• Competitive Analysis

• Corporate and Business Unit Strategy

• Cost Improvement

• Econometric Forecasting

• Innovation

• Marketing and Distribution Strategy

• Merger and Acquisition Strategy/Due Diligence and Execution

• Policy Development and Systems Design

• Sales Force Optimization

PRACTICES CAPABILITIES

OVERVIEW

• Founded in 1991 as a strategic advisory firm

• More than 270 members in 2014

• Offices in Boston, London, Singapore, Mumbai, Shanghai

and San Francisco

• Client mix includes Global 1000 corporations, middle-

market companies, private equity firms, educational

institutions, and healthcare institutions

• 29 Partners

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Parthenon completes more than 150 education projects per year in over 80

countries worldwide; 1000 projects completed in the last decade

Early Years K-12 Transnational Education ELT and Vocational Training Higher Education

= Education Projects

Completed

by Parthenon

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Representative MENA

On the ground experience

Parthenon has completed work in education on-the-ground across the MENA

region

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Agenda

Introduction to Parthenon

Global Higher Education Market

Perspectives on MENA Higher Education Market

Opportunities for Growth- Dubai Example

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Higher Education, Market Revenue by Country, 2014

China, India and Brazil are the largest higher education markets in the

developing world. However, Middle East market is growing the fastest

>20%

15%–20%

10%–15%

<10%

Revenue CAGR

(3 years)

N/A

China

$12M

Malaysia

$2,411.2M

Dubai

$578M Saudi

Arabia

$536M

South Africa

$328M

Kenya

$186M

Qatar

$150M

Abu Dhabi

$148M

Ethiopia

$16M

Singapore

$1,418M

Brazil

$9B

India*

$10B

Note: *Market size corresponds to Private Universities only

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Agenda

Introduction to Parthenon

Global Higher Education Market

Perspectives on MENA Higher Education Market

Opportunities for Growth- Dubai Example

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MENA countries’ tertiary gross enrolment typically trail wealth per capita

Note: ^Tertiary Gross enrollment ratio is enrollment in tertiary education regardless of age, expressed as a percentage of the total population of the five-year age group following on

from secondary school leaving.

Source: UNESCO, World Bank

0

25

50

75

100

105%

0 20,000 40,000 60,000

Qatar

Saudi Arabia

UAE

Singapore

South Africa

Brazil

Spain

IcelandAustraliaNew Zealand

Slovenia

Iran

Peru

Chile

Argentina

Italy

IndiaChina

USA

Mexico

Canada

PPP Adjusted Real GDP per Capita

$130,000

Te

rtia

ryG

ross

Enro

lmentR

atio

Lebanon

Croatia

TurkeyBulgaria

Romania

Tanzania

KenyaZimbabwe

UgandaMozambique

Costa Rica

Egypt

Colombia

United Kingdom+Northern Ireland

Germany

France

Thailand

South Korea

Philippines

Malaysia

Japan

Indonesia

R2 = 63%

Steep increase

(~8% CAGR)

Moderate increase

(~5% CAGR)

Stable enrolment growth

(~3% CAGR)

Tertiary Gross Enrolment Ratio (GER)^ Vs. PPP Adjusted Real GDP Per Capita, 2011

MENA countries typically

have lower GER relative

to their PPP per capita

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Enrollment growth in key markets have been between 9-15% annually

0

5

10

15%

Qatar

Enrolment CAGR, '10-'13

15%

Saudi Arabia

15%

United Arab Emirates

9%

12% 43% 49%Tertiary GrossEnrollmentRatio (GER)

Annual Enrolment Growth for Higher Education Institutions, by Country, 2010-2013

Source: UNESCO

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0

2

4

6

8%

Abu Dhabi

Gain in PrivateShare

7%

Qatar

4%

Saudi Arabia

1%

Dubai

0%

Increase in Private Enrollment as % of Total Enrollment, 2010-13

Private sector operators have been gaining share across key MENA markets

Source: Parthenon Higher Education primary research

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Source: Parthenon Higher Education primary research

0

20

40

60

80

100%

Dubai

Rochester Insti of Tech

MurdochAl Dar Uni College

Al Ghurair

British Uni in Dubai

Uni of Dubai

Emirates AviationUni

Dubai Medical ClgFor Girls

LBS

SP Jain

Emirates Academy of Hosp Mgmt

Amity

BITS Pilani

Manchester Buss School

Canadian Uni of Dubai

American Uni in Emirates

Heriot-Watt

American Uni in Dubai

Uni of Wollongong in Dubai

Islamic & Arabic Studies ClgUni of Modern Scncs

Manipal

Hult Intl Buss School

Middlesex

Uni of Jazeera

Uni of Saint JosephSaint-PetersburgExeter

ESMODDubai ClgOfDental MedicineEuropean UniClgDubai Sch OfGovtDubai Pol iceAcademyCambridge ClgIntlMichigan StateUniSynergyIHC

Jumeira Uni

SAEInstiImam Mal ik ClgFor Islamic Sharia &Law

IMT

Hamdan BinMohammed S.UniCass Buss School

Islamic Azad Uni

Royal Clgof Surgeons IrelandUni ofBradfordEmirates ClgFor Mgmt & IT

Dubai Pharmacy ClgAmerican Clgof Dubai

SZABIST

$578M

Saudi Arabia

Alfaisal Uni

Al Yamamah Uni

Uni of Business and Technology

Dar Al-Hekma College

Riyadh College of Denstistry

Dar Al Uloom Uni

Prince Sultan Uni

College of Business Administration

Ibn Sina National College for Medical Sciences

Effat Uni

Albaha Private College of Science

Others

Batterjee Medical College

Soliman Fakeeh College for Science and Nursing

Prince Fahad Bin Sultan Uni

Prince Mohammad Bin Fahd Uni

Qassim Private CollegeMohammadAl ManiCollege forMedical Sciences

$536M

Qatar

Georgetown Uni

Northwestern Uni

CarnegieMellon Uni

HEC Paris

Stenden Uni

Hamad bin Khalifa

Uni

Virginia CommonwealthUni

Uni of Calgary

Syscoms Institute

Texas A+M Uni

Uni College London

$150M

Abu Dhabi

Al Ain Uni of

Science andTechnology

Al KhawarizmiInternational College

Al Hosn Uni

Abu DhabiUni

EmiratesCollege of

Technology

New York Institute of Technology

EUROPEANINTERNATIONALCOLLEGE

ABUDHABISCHOOLOF MANAGEMENT

EMIRATESINSTITUTEFORBANKINGANDFINANCIALSTUDIES

Uni of Strathclyde Business School

SYSCOMS COLLEGE

$148M

1 44 12 11No of Institutes

41K 32K 8K 14KEnrolment 2015

10% 16% 19% 12%Enrolment CAGR,'12-'15

Total = $1,413M

Annual Revenue, Private Higher Education, By Country/Emirate, 2015

The largest and private higher education market is Dubai, sized at $578M

5 Largest

Universities in the

Country

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Growth of higher education is driven by increased expat and local demand,

government investment, and a need for employment-related courses

Increasing Expat

Demand

Increasing Local

Demand Government Investment

Need for Higher

Education as a Means to

Employment

• Increase in expat

population

• Supply of foreign

branch universities

recognized by home

campuses

• MENA as an

increasingly attractive

work destination for

expats

• Increase in post-

secondary age group

• More enrollment per

post-secondary age

group

• Need for education of

local population to drive

future growth

• Need for diversification

of economy towards

knowledge-based

industries

• Increasingly competitive

labour market for both

locals and expats

• Degrees at world-class

institutions a valued

resource

1 2 3 4

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0

20

40

60

80

100%

Dubai

% Expatriates

85%

Qatar

84%

Abu Dhbai

80%

Rest of the Emirates

78%

Saudi Arabia

31%

% Expatriates of Population, by Country, 2015E

Expatriates form ~80% of UAE’s and Qatar’s population

while Saudi Arabia has ~30% expats

Source: Newspaper Articles

Increasing Expat

Demand

1

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To cater to expats, there is a wide range of university

foreign branch campus offerings in MENA

British American Australian Indian Other

Dubai

Increasing Expat

Demand

1

Dubai Dubai Dubai Dubai

Qatar Qatar

Abu Dhabi

Abu Dhabi Abu Dhabi

Qatar

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Saudi Arabia has growing population of age for higher

education as well as an increasing tendency in enroll in

higher education

0.0

1.0

2.0

3.0M

2004

Populationof Age for

HigherEducation

2.1M

2005

2.1M

2006

2.1M

2007

2.3M

2008

2.4M

2009

2.4M

2010

2.4M

2011

2.4M

2012

2.4M

2013

2.4M

28% 58%29% 30% 30% 30% 31% 37% 43% 51%Tertiary GER

Population of Age for Higher Education in Saudi Arabia, 2004-2013

Source: UNESCO

Increasing Local

Demand

2

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Countries in Middle East spend a higher proportion of

their budget on education than the rest of the world

0

10

20

30%

SaudiArabia

25%

UAE

24%

Qatar

11%

Singapore

17%

Brazil

15%

UK

13%

US

13%

India

13%

France

10%

Government Spend on Education as % of Total Spend, by Country, 2013E

Source: UNESCO

Government Investment

3

Middle East Rest of the World

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NYUAD

KAUST

Qatar Education City

Location Abu Dhabi, UAE Thuwal, Saudi Arabia Doha, Qatar

Enrolment

(2015 est) ~800 ~1,200 ~2000

Local Sponsorship

/ Support

Significant budgetary support from

Abu Dhabi Government

Public university with a $20 billion

endowment fund Backing of the Qatar Foundation

Budget More than $200M ~$700M n/a

Long-Term View

on Profitability Non-profit Public University Non-profit

Strong Focus on

Research

Several multi-disciplinary research

initiatives in line with home campus

In 2013 it was announced that KAUST

had one of the fastest growing research

and citations record in the world

The education city has a dedicated

research centre in the complex

Reputation (QS/FT

Ranking) Rank: 247 N/A

Multiple highly ranked institutions

including UCL, Cornell and

Northwestern have a presence in the

Education City

Profile of Landmark Higher Education Institutions in MENA

Source: Parthenon Research

MENA governments have invested heavily into building

world-class research institutions

Government Investment

3

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0

25

50

75

100

125

EmploymentOpportunities

WeightedMentions

WeightedMentions

=101

Quality ofInfrastructure

WeightedMentions

=58

Total Fee

WeightedMentions

=46

Study AbroadPrograms

WeightedMentions

=33

Quality ofAcademics

WeightedMentions

=32

Proportion ofExpatriateTeachers

WeightedMentions

=17

Partnershipswith ForeignUniversities

WeightedMentions

=14

Quality ofEnglish

Instruction

WeightedMentions

=5

Q: What were your top selection criteria while enrolling in your current university?

Source: Emirati and Other Arab Student Survey (n=51)

Employment opportunities after graduation is the top

selection criteria for Emirati and other Arab students

when enrolling in a university

Need for Higher

Education as a Means to

Employment

4

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Employment-related courses (Business, Engineering,

and IT) account for ~80% of enrolment in foreign branch

campuses and only <50% in local universities

Source: Parthenon Higher Education Survey; KHDA; MOHESR; UAE National Bureau of Statistics

Private University Enrolment, By Type of University and Discipline, Dubai, 2013/14

Employment

related courses 0

20

40

60

80

100%

Foreign Branch

IT

Engineering

Business

Law

Others

Comm & MarketingArt & Social Sciences

18K

Local

Medicine

Law

IT

Business

Engineering

English Language

Others

Comm & Marketing

Islamic

Art & Social Sciences

23K

82% 46%% EmploymentRelated

26 24No. of Institutes

Need for Higher

Education as a Means to

Employment

4

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Private universities have more Western faculty than

public universities resulting in higher standards of

English language-based tuition

Need for Higher

Education as a Means to

Employment

4

Commentary

• “English as the language of instruction

has gained popularity with both students

and employers. Private universities have

a higher percent of expatriate teachers,

which ensures students get exposure to

English. This has been one of the key

success factors for private universities

here”

• “Compared to Saudi nationals, expatriate

teachers perform better. Hence a number

of private universities employ expatriate

teachers

– Former Provost and Acting

President, Saudi Arabian Private

University

Percentage of Western Faculty in Private and Public Universities, 2010

0

20

40

60

80

100%

Private Average

Western Faculty

36%

Public Average

5%

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Agenda

Introduction to Parthenon

Global Higher Education Market

Perspectives on MENA Higher Education Market

Opportunities for Growth- Dubai Example

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Dubai Abu Dhabi

Complexity of

Regulations

Time Required to

Obtain Approvals

~1 year ~3 years

Foreign Ownership

Approval Body

Ease of Entry

Private Enrollment 2015 41K 14K

Dubai is an example of an economy that has been successful in attracting a

wide range of options due to its favourable regulatory environment

Attractive Unattractive

Source: Parthenon Research

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Students are increasingly mobile; transnational education takes

~2.5M students every year to global hubs

Canada 100KStudents

=$3B Revenue

UK 400KStudents

Australia 300KStudents

USA 600K Students

Singapore ~30KStudents =$0.5B Revenue

Dubai ~6KStudents =$0.1B Revenue

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Dubai’s Value Proposition

Employability-Related Courses

Student Satisfaction

Attractive Location

Dubai’s value proposition for higher education students is

driven by three key assets

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0

20

40

60

80

100%

Western ForeignBranch

% Business

79%

Local offeringForeign

Curriculum

% Business

62%

EasternForeign Branch

Curriculum

% Business

54%

Local offeringLocal

Curriculum

% Business

49%

('11-'14)

9%

% Business Enrolments, By Type of University, Dubai, 2014

Source: Parthenon Higher Education Survey; KHDA; MOHESR; UAE National Bureau of Statistics

Employment related courses are driving growth across the different

university segments, particularly in the Western foreign branches

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Satisfaction with the Dubai experience is high among both current

students and recent graduates

0

100

200

300

0 = ExtremelyPoor

1

2

3

4

5

6

7 = ExtremelyGood

# ofQuality

Institutions

290

JobPlacement

Record

209

PreferedCourseQuality

112

LocalInfra-

structureQuality

61

CampusFacilitiesQuality

60

CourseQuality

57

Recognitionof DegreeGlobally

26

Accom-adationQuality

19

Other

60

Current StudentSatisfaction

Recent GraduateSatisfaction

Q. Which of the following factors did you consider when selecting a country/city

for higher education?

Q. How does Dubai rate on the top 3 factors?

Source: Dubai Current Students and Recent Graduates Survey, n=149 (current students=99; recent graduates=50)

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Why is Dubai an attractive destination for students?

Source: Parthenon Analysis

Close to the

World

• Ideally located to attract European, African, East,

Southeast Asian, South Asian, GCC, and CIS

students

1

English Speaking • Students can use and improve their English, and

the degree is well perceived internationally

3

Safe • Safe environment for students, an important

factor for both students and families

2

Strong Economy • A fast-growing economy in need of graduates in a

variety of industries

4

Quality of Life • Diverse, culturally active city

• Expo 2020 host city will attract global attention

5

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How can Dubai increase international students?

Develop “Education

Dubai” Brand

Identify Key

Source Countries

Develop Strategic

Marketing Plan

• Develop

regional/local

messaging and

product

Build Relationships

with Agents

• Prioritize markets

based on growth

rates and external

factors

• Target the

identified source

markets through

relevant language

and channels

• Develop

relationships with

agents or agent

aggregators in the

identified markets

1 2 3 4

0

20

40

60

80

100%

Malaysia Private Higher Education*

OtherSouth Korea

Other Indian Sub-continent

PakistanBangladesh

China

Other SE Asia

Indonesia

Other Middle East

Yemen

Iran

Other Africa

SudanLibya

Nigeria

62.7K

APU

Other IndianSub-Continent

IndiaMaldives

China

Other SE Asia

Indonesia

Central Asia

Other Middle East

Yemen

Oman

Iran

Other Africa

Tanzania

4.8K

Taylor's

South Korea

Other Indian Sub-continent

Pakistan

Maldives

China

Other SE Asia

Indonesia

KazakhstanOther Middle East

Iran

Other AfricaTanzania

Mauritius

2.5K

Other East Asia

OtherCentral Asian

Kazakhstan

Others

East Asia

Other

Other East Asia

Other Central Asia

55% 60% 22%% Students from Africa,Middle East and Central Asia