Mashreq Bank, together with a group of regional banks, has arranged a landmark $3.25 billion Sustainability-Linked Leveraged Buyout financing for GEMS Education. More than just large in financial scale, this transaction also represents new standards in infusing sustainability into the education sector.
PC: Economy Middle East
Key Participants and Roles
This was led by Mashreq Bank in its capacity as Lead Sustainability Coordinator, Initial Mandated Lead Arranger and Bookrunner, Account Bank, Global Agent, and Conventional Facility Agent. Other notable participants in this banking group were Dubai Islamic Bank, Abu Dhabi Commercial Bank, and First Abu Dhabi Bank—thereby making this a committed regional collaboration in sustainable finance.
Driving Sustainability in Education
The financing package is designed to support sustainability practices in GEMS Education. By pioneering this Sustainability-Linked facility, Mashreq is looking to support GEMS in enhancing sustainability while continuing to pursue educational excellence. This aligns with GEMS Education’s strategic vision, where sustainability assumes a very important role in the long-term objectives.
Sustainability as a Core Value
According to Sunny Varkey, founder chairman, GEMS Education, integrality of sustainability within their strategic framework cannot be overemphasised. The partnership with Mashreq will help GEMS further accelerate on their set of sustainability goals by making their educational offerings compliant with the global environmental benchmark. This helps GEMS provide quality, inclusive, and environmentally conscious education.
Supporting Sustainable Growth
Ahmed Abdelaal, group CEO of Mashreq, underlined the transaction’s importance in terms of charting new standards for sustainable finance in the education sector. He added that Mashreq is actively supporting GEMS in their commitment to environmental and societal advancement through the embedding of financial incentives for better sustainability performance. This epitomises Mashreq’s dedication to fostering sustainable growth through innovative financing solutions.
Ambitious Sustainability Targets
The facilities also provide financing against Key Performance Indicators, targeting ambitious Sustainability Performance. These targets include an increased share of renewable energy in school operations, certification of teachers in climate and environmental topics, and the development of a scholarship program with emphasis on diversity and inclusion. GEMS Education has gone a step further by committing to an overarching initiative for better management and reporting of resources; this is very much in line with their goals to promote quality education while reducing environmental impacts.
Syndication and Refinancing
On 18 June 2024, the multibillion-dollar facility was underwritten and pre-funded by the local bank consortium led by Mashreq. This syndication provided an exit for the majority shareholders, including CVC Capital Partners, and refinance existing debt of GEMS Education. The bank facility will further be syndicated in the primary loan market, involving a huge response from interested investors and buttressing confidence in this Sustainability-Linked Financing model.
Future Outlook
Notably, Mashreq Bank is devoted to sustainable finance beyond this transaction, having the aspirational goal of accomplishing $30 billion in financing and facilitating sustainable finance by 2030. Such an ambitious goal underscores Mashreq’s leadership in terms of actively promoting sustainable development across all sectors, including education, and further anchors its leadership in sustainable finance within the Middle East region.
In sum, the $3.25 billion Sustainability-Linked Leveraged Buyout financing that Mashreq Bank led for GEMS Education is a landmark step in linking sustainability to educational finance. This facility provided support to GEMS Education in its goals for sustainability while setting precedence for what will become the future course of sustainable financing efforts in the education sector globally.
