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Deal Maker of the Year Awards 2012 WINNER - KUWAIT
DEAL: United Education Company acquires an 82% equity interest in Al Rayan Holding
NAME: Yann Pavie COMPANY: GulfMerger POSITION: Founder and Managing Partner TEL: +965 2245-4804 x 101 EMAIL: yann.pavie@gulfmerger.com WEBSITE: www.GulfMerger.com
BIO:
Yann Pavie is Founder and Managing Partner of GulfMerger. Prior to founding GulfMerger, Yann assumed senior positions of increasing responsibilities with the National Bank of Kuwait, the Middle East’s leading bank, as Chief Operating Officer and Board Member of NBK Capital, National Bank of Kuwait's merchant banking arm responsible for the bank’s global investment banking and alternative asset management businesses.
Yann has advised leading multinational corporations and regional firms on over USD15 billion in mergers and acquisitions and capital raising transactions in sectors encompassing building materials, energy, financial services, manufacturing, media, retail, telecommunications, technology, and transportation, where he completed over thirty mergers and acquisition transactions for clients including Italcementi, Zain, Kuwait Petroleum Corporation, Kuwait
Investment
Authority, Jazeera Airways, Al Rai Media Group, and KIPCO.
Yann has over sixteen years of work experience in investment banking and private equity and holds a Bachelor of Business Administration from the Fox School of Business from Temple University and a Masters in Business Administration from the Wharton School, where he graduated as a Palmer Scholar.
DEAL OVERVIEW: Q
Please summarise the transaction
Based in Kuwait, Rayan Holding (“Rayan”) is the country’s largest K-12 private education company and one of the largest in the GCC region in terms of student headcount, with over 10,000 students of various ethnic and socio- demographic backgrounds. Rayan manages six schools offering various curricula, namely Arabic, British, Indian and Pakistani. Rayan was majority-owned by Global Capital Management (“Global”), a leading regional private equity firm, with the balance of the shares held by co-investors.
In July 2012, Global and certain co-investors - the selling consortium - advised by GulfMerger sold 82% of the shares in Rayan to United Education Company, a Kuwait-based education company engaged principally in higher education.
The sale of Rayan represents (1) the largest K – 12 education M&A deal in the GCC region to-date and (2) one of few successful exits for private equity investors in the region in 2012.
Q
What was your role within the transaction?
GulfMerger acted as sole sell-side financial advisor to Rayan’s selling consortium and managed a global sale process covering international and regional strategic and financial investors. Interestingly, we were able to generate strong interest from international K-12 companies in Asia and Europe.
Q
What were the challenges or difficulties presented?
Key deal challenges included (1) real estate owned by Rayan for its schools that (a) inflated the overall deal value and (b) was unwanted by most buyers and (2) government regulation in relation to leases extended by the Ministry of Education.
Q Q
How were the challenges or difficulties overcome?
In relation to real estate owned by Rayan, we generated interest from regional real estate investors to purchase Rayan’s owned properties on a sale and lease back basis. In relation to government regulation, we provided certain assurances through deal structuring and legal representations.
What other types of clients or transactions have you been involved with?
GulfMerger is the leading mid-market M&A firm in the GCC and has advised on the largest number of M&A deals since establishment in 2007. We advise international and regional private-sector clients and have successfully advised on deals across all sectors. Landmark deals in 2012 include (1) the sale of Rayan Holding representing the largest K-12 education deal in Kuwait, (2) the sale of a 35% equity interest in Hokair Group in Saudi representing the largest PE deal in 2012 and the second largest in the history of the kingdom and (3) a $150 growth capital investment by Abraaj Capital into Kuwait Energy where we acted as financial adviser to Kuwait Energy, the largest independent MENA oil and gas producer. The Kuwait Energy deal is the largest PE investment in oil and gas in the region.
Q
What are your thoughts and predictions for 2013 and beyond?
In relation to education, the Rayan deal is clear evidence that the education sector has been able to withstand the more challenging environment in the region. GulfMerger sees significant opportunities for further consolidations in the education sector across the region. We are currently advising on number of education transactions across Saudi Arabia and Kuwait.
In relation to other sectors and similar to education, we expect to see M&A activity in more defensive sectors such as healthcare and food processing during 2013.