July 11, 2018 / 7:01 AM / 10 months ago

Owners of Saudi schools operator weigh sale of business: sources

DUBAI (Reuters) - The owners of Ma’arif for Education & Training, the largest owner and operator of private schools in Saudi Arabia, are in talks about selling the business, two sources familiar with the discussions told Reuters on Tuesday.

They are looking at either an outright sale or spinning off assets through a real estate investment trust, the sources said.

Ma’arif, owned by the Al Blehed family, runs more than 100 schools across the kingdom, offering Arabic, British and American curricula, according to its website.

The family is working with Samba Capital, the investment banking arm of the kingdom’s third largest lender by assets, Samba Financial Group (1090.SE), said the sources, who declined to be named due to commercial sensitivities.

The potential deal could fetch as much as $1.5 billion if it includes the real estate holdings where the schools are located, one of the sources said.

Ma’arif and Samba did not respond to queries for comment when contacted by Reuters.

Dealmaking activity in the Gulf has picked up over the past year as sellers have begun to come around to the idea of selling at lower prices amid sluggish Gulf economies, bankers say.

Many private economists expect Saudi Arabia’s non-oil economy to grow by under 2 percent this year, up from 1.0 percent growth last year but still subdued because of government austerity measures, such as January’s introduction of a 5 percent value-added tax and an exodus of foreign workers.

Consumer-focused companies which can tap into the region’s young and relatively affluent population continue to draw investor demand.

Saudi authorities have announced plans to expand the role of the private sector in education, potentially creating billions of dollars of new opportunities for investors.

The kindergarten through grade 12 private education market - school grades prior to college - in the Gulf region is expected to double over the next five years to $26 billion by 2023, according to a Boston Consulting Group report published in May.

In Saudi Arabia that market is expected to more than double to $12 billion in 2023 from $5 billion in 2017, the report said.

Additional reporting by Saeed Azhar and Andrew Torchia; editing by Jason Neely

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