Deutsche Bank recognizes the important role that low-cost private schools play in reaching the poor and improving their access to high-quality education in the developing world. Deutsche Bank has partnered with Grey Ghost Ventures and Bridge International Academies to commit ,000,000 in investments to develop scalable systems that use new capital to strengthen local expertise and delivery systems that will eventually provide millions of poor children in the developing world with high quality education.
Deutsche Bank has identified three important interventions required for expanding high quality education options for the poor in the developing world. These include building strong human capital, creating a market and greater access to capital, and the standardization of a quality delivery model.
Bridge International Academies and Gray Ghost Ventures have developed complementary interventions in Kenya and India respectively that respond to particular market needs by providing access to capital and developing the skills of local entrepreneurs, teachers, and leaders. Eventually, as these models are developed Bridge International Academies and Gray Ghost Ventures will be able to operationalize a complementary global strategy. During this first year, each institution will lay the groundwork for the development of core systems and solutions.
In Kenya, Bridge International Academies has responded to the high variance in quality and cost effectiveness of and the limited capacity for investing in instructional infrastructure by developing a model for franchising low-cost private schools and creating a centralized hub of management and training expertise that supports them.
In India, where low-cost private schools have reached a critical mass, Grey Ghost Ventures' Indian School Finance Company (ISFC) will extend loans to creditworthy schools serving low income families in their communities to achieve the twin goals of strengthening financially sustainable affordable private schools and building a high-quality, high-return loan portfolio that would be attractive to investors.
Deutsche Bank will maintain a financial position with NewGlobe Schools and Gray Ghost Ventures during the 2008-2009 incubation and model development phase.
With a planned launch of its first school in January of 2009, NewGlobe Schools, Inc. (NewGlobe) will roll out a franchise of low-cost for-profit private primary schools that will provide poor families in Kenya with access to affordable high quality education. This is a high risk/high reward venture that has the potential to develop a new model for quality affordable education for low-income communities in the developing world. NewGlobe's research in Kenya indicates that parents who send their children to government schools report paying fees of between and per month. NewGlobe School's tuition will be the equivalent of .40 per month. Based on a recent survey conducted by NewGlobe Schools, the price target of its schools puts NewGlobe in the lowest 5th percentile of low-cost private primary schools in Nairobi. During 2008, NewGlobe will set up its organizational infrastructure and in 2009, will build out its first three company-owned schools to test and prove out the NewGlobe model using a ,000,000 equity commitment. The first school is scheduled to open in January 2009 and will coincide with the beginning of the school year in Kenya. NewGlobe Schools has a plan to have 50 schools operational by 2010.
Gray Ghost Ventures' (GGV) seeks to connect schools with resources that allow them to improve quality while remaining accessible and affordable for low-income families. The Indian School Finance Company, Gray Ghost Ventures' school lending company in India is a critical first step in demonstrating that lending to private schools for the poor is a viable large scale proposition for channeling capital to investment ready school managers; for attractive investor returns; and, in building quality loan portfolios. Success in lending to Hyderabad's vibrant private school market of more then 3,100 schools will provide the operating model for expansion to other Indian urban markets and eventually other countries. Although most schools have generated enough income to slowly expand operations throughout the years, they require financing to more adequately address infrastructure needs and improve educational quality. In most cases, the loans required for these operations are too large and long term for microfinance institutions, but too small to attract traditional financial institutions. GGV will seed its first loan in India in October 2008 with a plan for 1,000 loans by 2010.
The Indian School Finance Company (ISFC) aims to design a certification course that will equip candidates with the necessary skills to take Loan Officer positions with the ISFC, initially in India and eventually in other countries which have a concentration of affordable private schools aimed at low income families.
The ISFC will open its first branch and national head office in Hyderabad in July 2008. The management team and key back office personnel will operate out of Hyderabad. Training programs for the Loan Officers will tentatively be held at the Basix Livelihoods training academy in Hyderabad from July 2008.
In 2009, an additional branch will be started in a 2nd city that is to be determined. Bangalore and Chennai are likely candidates for the next branch office because of the proliferation of private schools in both cities over the past few years and their relative proximity to Hyderabad.
SEEKING: Financial Resources, Media/Marketing Opportunities
Deutsche Bank seeks partnership to: build public awareness, connect with partners who are interested in providing investment capital and strengthen local partnerships in India and Kenya particularly. Many investors (similar to the early days of microfinance) and philanthropic institutions are not familiar with the double bottom-line investment opportunity that exists with emerging low-cost private school sector.
OFFERING: Best Practice Information