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Thursday, 23 December 2021

The private sector really likes higher education

Actis-backed Honoris makes an entry into Egypt with Merit University acquisition: Pan-African private sector higher education operator Honoris United Universities announced (pdf) today that it signed a transaction to acquire Merit University in New Sohag City for an undisclosed amount. The transaction, which is pending regulatory approvals, marks Honoris’ entry into Egypt, adding Merit to its lineup of other universities in Morocco, Nigeria, Tunisia, Southern Africa and Mauritius. “Given Egypt’s significant potential and strength in higher education, we are pleased to be making this investment in the educational system of the country,” Honoris CEO Jonathan Louw said.

A sizable investment: While Honoris, which is majority owned by private equity giant Actis, did not disclose the size of the acquisition, it is sizable, Actis partner and head of MENA and Honoris board member Sherif El Kholy told Enterprise in an exclusive statement. The transaction, which had been in the works for the past six months, is “up there with the bigger tickets we have done,” he tells us.

More to come in Egyptian education: Actis is working on other transactions, as the private equity firm is a big believer in Egypt and its education market, he tells us.

Why Merit? The allure of a health sciences program in Upper Egypt: What apparently made Merit appealing to Honoris is its focus on STEM, with faculties in medicine, pharmacy and physiotherapy. Upon completing the transaction Merit would be the second university in Honoris’ portfolio to have a dedicated faculty of medicine, the statement from Honoris said. Merit is also one of only four private universities operating in Upper Egypt, and the only one in Sohag, Honoris said. The university opened its doors to students in October 2020.

The private sector and gov’t are increasingly eyeing universities outside of Cairo and Alex: New private and nonprofit universities have been opening up recently or are expected to. These include Al Salam University in Gharbia, and Sphinx University. Private sector education outfit CIRA, is partnering with privately owned investment company Elsewedy Capital Holding to build and run a private university in New Damietta.

Universities outside Cairo have an advantage over K-12, sector leaders told us earlier this year. For one, land availability for schools is limited, as opposed to universities, while land outside the main cities is always cheaper. Location isn’t as important for universities as it is for K-12 as much as quality higher education. The government also appears to be cutting red tape for private universities to open their doors outside of Cairo.

Who are Honoris? Honoris owns and operates 70 campuses and learning centers in 10 African countries and 32 cities catering to around 61,000 students. It operates 14 institutions ranging from multidisciplinary universities, to specialized schools, to technical and vocational institutes. It is Actis’ main education platform in Africa.

Advisers: Compass Capital acted as advisor to Merit, with Al Tamimi & Co providing counsel on the sell-side. Honoris was represented locally by Matouk Bassiouny & Hennawy, while Clifford Chance acted as international counsel, with PwC having conducted financial and tax due diligence for Honoris.

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