International schooling giant GEMS Education is offloading its schools in Malaysia to a recently formed operator backed by a US private equity giant, EducationInvestor Global can reveal. 

EIG has learnt that XCL Education, an Asia-focused school operator launched last year with backing from TPG Capital and Singaporean state-owned fund Temasek, will acquire GEMS Education Malaysia, comprising two large all-through schools in Subang Jaya and Penang. 

The takeover, the value of which is unclear, is scheduled to complete in August, a source said, adding that the process has been “managed in-house” without sell-side advisors. 

According to International Schools Database, GEMS Education Malaysia’s school in Penang has around 540 students enrolled, while its institution in Subang Jaya caters to more than 450 pupils. 

Founded by former Cognita executive Brian Rogove, XCL (pronounced ‘excel’) in January bought GEMS World Academy Singapore, as revealed by EIG

Like GEMS World Academy Singapore, GEMS Education Malaysia is owned by the family office of Sunny Varkey, GEMS’ founder. 

Varkey’s investment vehicle controls a number of schools in Asia, Africa, Europe and the US that bear the same branding but have no legal affiliation with, and are not managed by, GEMS’ Middle Eastern business, in which CVC Capital Partners owns a minority stake. A consortium of investors led by CVC invested in the business in 2019, as revealed by EIG.

XCL was in a prime position to take control of GEMS Education Malaysia as it had already dealt with the Varkey family office in acquiring GEMS World Academy Singapore, which caters to more than 900 students. 

Several rival international school operators to GEMS are understood to have looked at GEMS Education Malaysia – however, none opted to pursue a deal, it is understood. 

Shortly after XCL closed the deal to acquire GEMS World Academy Singapore, it sparked discussions with the Varkey family office about buying GEMS Education Malaysia, a source said. 

According to its website, XCL Education serves more than 30,000 students in Southeast Asia across five brands, encompassing pre-schools, schools and English-language training centres. Some 15,000 students are enrolled at its 15 school campuses.

Rogove declined to comment when contacted by EIG. The Varkey family office could not be reached for comment at the time of publication,

Date published: 11 August 2021

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