Parthenon Perspectives

Boston t London t Mumbai t San Francisco

K-12 Southeast Asia: Seizing the
Opportunity for British Schools
Opening Campuses Abroad
Prepared for
www. par t henon. com
On-the-Ground Education Sector Projects Completed by Parthenon
About The Parthenon Group
Parthenons Global Education Presence
About The Parthenon Groups Education Practice
The Parthenon Group is a leading advisory rm focused on strategy consulting, with ofces in Boston, London, Mumbai,
and San Francisco. Parthenons Education Practice is the largest advisory team to focus on the education sector, both
for-prot and non-prot/government. Parthenon has 40 professionals focused on advising the MENA and Asian education
sectors. The Education Practice is a leading advisor to the global education industry with clients across diverse sectors
that include publishing, primary and secondary education, higher education, consumer education, vocational education,
corporate training, governments, foundations, NGOs, and other non-prot organizations. Parthenon completes more than
150 education projects per year in over 60 countries globally.
Boston t London t Mumbai t San Francisco
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
1
Executive Summary
Parthenons research shows there is a strong link between a countrys tertiary
enrolment ratio and economic strength. While the education sector in Southeast Asia
is growing, the tertiary enrolment ratio is likely to increase further as income per capita
increases. This indicates that the Southeast Asian countries are still in their nascent
stages of education development, and as a result, a signicant investment in education
infrastructure is required for these countries to reach international benchmarks. Even
though British brand schools are an increasing phenomenon outside the UK, evidence
suggests that they have a mixed record of success in executing these initiatives. This
report identies the critical success factors required to tap into these opportunities.
In order to establish a successful branch campus abroad, it is crucial to set and achieve
realistic enrolment targets by:
t Evaluating the target population (expats and afuent locals)
t Addressing the level of incremental market demand available in the local market,
given competition and student or parent preferences
Methodology
The Parthenon Group followed a bottom-up approach to collect data at the school level and referred to published
information from government sources to corroborate our ndings and results. Our research for primary and
secondary education sectors comprised of more than 300 international curriculum schools across Southeast Asia,
which enrol more than 150K children.
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
2
Economic Strength Is Closely Linked to a Countrys Enrolment Ratio
Tertiary Gross Enrolment Ratio (GER) vs. PPP Adjusted GNI Per Capita
Note: UNESCOs Gross Enrolment ratio ISCED 5 and 6. This ratio is calculated using the number of pupils enroled in International Standard Classication of Education (ISCED) level 5 and 6 repre-
senting stages of tertiary education, regardless of age, expressed as a percentage of the population in the ve-year age group following on from the secondary school leaving age
Parthenons research shows there is a strong link between a countrys tertiary enrolment ratio and economic strength.
While the education sector in Southeast Asia is growing, the tertiary enrolment ratio is likely to increase further as
income per capita increases. This indicates that the Southeast Asian countries are still in their nascent stages of education
development, and as a result, a significant investment in education infrastructure is required for these countries to
reach international benchmarks. In order to develop globally competitive economies, the Southeast Asian region should
consider the development of education infrastructure as a long-term sustained imperative. Signicant investment in K-12
education now will help in preventing a potential tertiary education gap and employment gap in the future.
In addition to being a strategic imperative, K-12 schools are good investment opportunities for the private sector as they
have ve investor friendly characteristics which are rarely found together in one business:
Long-Term
Revenue
Visibility
High Barriers
to Entry
Demand
Greater Than
Supply
Prices Rising
Higher Than
Ination
Negative
Working
Capital
K-12
9 9
Depends on
Catchment Area
9 9
0
20
40
60
80
100%
0 20,000 40,000 60,000
Ukraine
Israel
Finland
Belarus
Australia
Algeria
PPP adjusted GNI per Capita
E
n
r
o
l
m
e
n
t
R
a
t
i
o
Philippines
Vietnam
Myanmar
Laos
Singapore
Uzbekistan
Uruguay
United States
United Republic of Tanzania
UK
Turkey
Tunisia
Thailand
Tajikistan
Switzerland
Sweden
Spain
Slovenia
Slovakia
Russian Federation
Romania
Republic of Moldova
Republic of Korea
Portugal
Poland
Pakistan
Norway
New
Zealand
Netherlands
Nepal
Morocco
Mongolia
Mexico
Malaysia
Madagascar
Macao, China
Lithuania
Lebanon
Latvia
Kazakhstan
Jordan
Japan
Italy
Ireland
Indonesia
India
Iceland
Hungary
Hong Kong (China), SAR
Guatemala
Greece
Ghana
Georgia
France
Ethiopia
Estonia
El Salvador
Denmark
Czech Republic
Cyprus
Croatia
Colombia
China
Chile
Cape Verde
Cambodia
Burundi
Burkina Faso
Bulgaria
Brunei Darussalam
Brazil
Bhutan
Belgium
Bangladesh
Azerbaijan
Austria
Armenia
R
2
= 61%
Southeast Asia
Other
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
3
Rise of Household Income and Affordability in Southeast Asia
Over the past few decades, the Southeast Asian countries have gone through signicant economic and social change.
For outside investors, the Southeast Asian countries have become attractive investment opportunities. From within
these countries, household income has rapidly risen, enabling families to afford a higher quality of living. Countries in the
Southeast Asian region have identied education as an enabler to transform their economies and achieve sustainable long-
term growth.
Abdullah Ahmad Badawi, former Malaysian Prime Minister, believes: To develop the human capital, we want our
citizens to be fully equipped with knowledge, practice good moral values, have a broad mind, love the country, and possess
the physical and spiritual strength.
Education has a crucial role in this evolution and will create the necessary workforce for newly developed industries.
The Southeast Asian education sector has gone through important structural changes and is expected to grow strongly,
creating a signicant opportunity for investors. Drivers of growth include increase in average household income,
increase in inflow of FDI, increased demand for English, and increased demand for better infrastructure and quality
of education.
Premium K-12 International Curriculum Revenue Size and Growth
Above 25%
20% 24%
15% 19%
10% 14%
Vietnam, US$0.2B
India
US$0.4B
Thailand
US$0.5B
China
US$1.7B
Singapore
US$0.7B
Malaysia, US$0.3B
Indonesia, US$0.2B
Parthenons research of Southeast Asian countries shows rapid enrolment growth of international curriculum schools,
ranging from overall 3-18% enrolment growth by country.
This report focuses on opportunities and challenges in K-12 education in Kuala Lumpur and Bangkok as they are both
relatively large markets. The fast international curricula enrolment growth levels of the former (~8% at ~$220M) and the
mature international curricula enrolment growth levels of the latter (~3% at ~$380M) make these markets interesting case
studies for investors in education.
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
4
Bangkok Is a Mature Market for International Schools
The international school market in Bangkok is estimated to be worth ~US$380M, and enrolment has grown at 2.8% per annum,
which is relatively slow compared to markets in other Southeast Asian countries. Local students currently make up 50% of
the international school population, and their share is growing faster than the expatriates segment of the K-12 school market.

International School Enrolment in Bangkok by Nationality, 2008-2011
Source: Parthenon Schools Survey
The growth of international schools in Bangkok is inuenced by the following factors:
t Increasing afuence of Thai nationals: A 2% increase in annual household income has led to an incremental
enrolment of 3.6% for local students in international schools, predominantly in the budget segment (international
schools charging less than US$6K annual tuition fee).
t Growing expat enrolment in international schools: The expat enrolment in international schools for Bangkok has
grown at 1.9% per year. This is an outcome of the slow growth in the real FDI stock for Bangkok which has only grown
at 2% from 2008-2011.
t Opportunity for differentiation to drive enrolment and school stature: Premium international schools in Bangkok
have 4.5 years of capacity given current utilization and enrolment growth rates, unlike Ho Chi Minh City (already at
capacity) and Kuala Lumpur (one year of current capacity remaining). Schools that differentiate themselves based on
academic rigor, athletics, community values, or the environment could attract a niche segment of parents and grow
their enrolment faster while attracting a motivated set of students.
0
10
20
30
40K
2008
30.5K
2011
Expatriates
Thai
Nationals
33.1K
3.6%
1.9%
('08-'11)
2.3%
CAGR
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
5
The International School Market in Kuala Lumpur Is Growing Fast
The international school market in Kuala Lumpur is estimated to be ~US$220M and growing at 8.1% per annum. The total
enrolment in international schools for Kuala Lumpur comprises 85% of the total expatriate enrolment in Malaysia.

International School Enrolment in Kuala Lumpur/Greater Kuala Lumpur
by Nationality, 2008-2011
Source: Parthenon Schools Survey
With 16 schools added to the market from 2005-2010, the growth of the international schools is driven by:
t Increasing afuence of Malaysian nationals: The annual increase of 2.5% in local household income has made
it possible for more Malaysians to attend international schools, especially in the mid-priced segment (international
schools with price points between US$6K-15K). This together with an increased demand for English language
education has led to a 9% growth in the enrolment of Malaysian students in international schools.
t Inux of expatriates: Foreign investment (measured in real FDI stock) has been growing at 8% per year, resulting in
a growing expatriate population in Malaysia. Even though the number of expatriate students is growing slower than
the share of local students, expatriates still make up ~60% of the total incremental enrolment in international schools
between 2008-2011.
0
10
20
30K
2008
17.6K
2011
Expatriates
Malaysian
Nationals
22.2K
7.6%
9.0%
('08-'11)
8.1%
CAGR
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
6
A Worldwide Assessment of Performance of British Brand Schools Abroad Suggests
Signicant Potential
Enrolment in Kuala Lumpur and Bangkok by Curriculum, 2011
*Note: The only British + IB school recently opened
The British curriculum and mixed British curriculum combined make ~70% and ~40% of total international enrolment in
Kuala Lumpur and Bangkok, respectively. Investors should explore investment opportunities and trends within this segment.
Through its worldwide research, Parthenon has identied and developed insights into the burgeoning trend of British
schools opening campuses abroad. For the last 13 years, British schools have been opening branch campuses abroad to
serve a growing expatriate population and afuent local students. Currently, there are 18 branch campuses of British
schools across 8 countries enroling 12 thousand students. These 18 campuses have a combined turnover of ~US$275M
growing by 15% a year.
With the establishment of Shrewsbury, Harrow, and Bromsgrove schools, Bangkok has beneted from the ongoing trend of
prestige British schools opening campuses abroad. Although Kuala Lumpur does not have any branch campuses of British
schools, the fast enrolment growth of British curriculum schools and plans for Epsom to open a campus this year in Kuala
Lumpur suggest a strong partnership opportunity with British schools.

0
20
40
60
80
100%
Kuala Lumpur
British
American + IB
Other
IB
22.3K
Bangkok
American
British + IB
British
Other
American + IB
IB
33.2K
British + IB
15+%
10 14%
5 9%
0 4%
<0%
Enrolment Growth 8% 3%
Total Enrolment 15K 33K
British-
Based
Curriculum
British-
Based
Curriculum
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
7

Enrolment in Branch Campuses of British Schools Across the World, 2011
Source: ISC Research Ltd; Parthenon research and analysis
Other than Epsom, Marlborough, Harrow, and Dulwich have also conrmed that they are opening new campuses abroad.
School City Year
Harrow Hong Kong 2012
Epsom Kuala Lumpur 2012
Marlborough Iskandar 2012
Dulwich Abu Dhabi 2012

The assumption of many British school brands is that their reputation will result in parents switching children from local
schools or existing international schools. A related assumption is that economic growth in emerging economies will generate
sufcient demand from expatriates and wealthy locals to ll the school. The experience of British schools abroad so far, in
some cases, has challenged these assumptions given the mixed record of success. These experiences provide insights into
how investors in Kuala Lumpur and Bangkok can approach and seize the opportunity of the ongoing trend of British schools
opening campuses abroad.
Meeting Targets and Protecting the Brand
Of the 18 operational branch campuses of British school brands, 9 are more than 4 years old and of those only 3 have
reached capacity utilization on built capacity of more than 70%. Of all 18 branch campuses, only 3 met or beat their
rst year enrolment targets, despite British branch campuses outperfoming the largest competitor in each market.
0
20
40
60
80
100%
China
Dulwich (Zuhai )
Wellington(Tianjin)
Harrow (Beijing)
Dulwich (Suzhou)
Dulwich (Shanghai)
Dulwich (Beijing)
4.2K
Thailand
Bromsgrove
(Bangkok)
Harrow
(Bangkok)
Shrewsbury
(Bangkok)
2.9K
UAE
Brighton
(Abu Dhabi)
Repton
(Dubai)
2.6K
S
o
u
t
h
K
o
r
e
a
N
o
r
t
h
L
o
n
d
o
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(
J
e
j
u
)
D
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i
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l
)
0
.
8
K
K
a
z
a
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a
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b
u
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y
(
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s
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)
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a
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b
u
r
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(
A
l
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)
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.
8
K
Q
a
t
a
r
0
.
3
K
S
h
e
r
b
o
r
n
e
(
Q
a
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a
r
)
Nigeria
B
u
c
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s
w
o
o
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ig
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s
b
r
id
g
e
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c
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o
o
l
(
T
i
v
a
t
)
Total =
11.7K
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
8

Capacity Utilization and First-Year Enrolment Targets at Branch Campuses of British Schools
Source: Parthenon research and analysis
Given the high cost of capital in emerging markets, missing enrolment targets in early years can signicantly lower
the return on capital and feasibility of the project. Realizing less than 70% utilization by year 4 of operations usually
results in a lower than planned return on capital, which can force investors to generate incremental cash ow by cutting
operating costs such as teacher salaries and facilities maintenance, which in turn will impact quality.
Typical Project IRR of Branch Campus of British School
Based on Year 4 Utilization on Built Capacity (Illustrative)
Source: Parthenon research and analysis
Incorrectly estimating enrolment potential can threaten the feasibility and quality of the branch campus, diluting the value
of the brand, and defeating the rationale for expanding abroad.
At present many British schools do not conduct a data-driven feasibility analysis to quantify potential demand, relying
instead on anecdotal data or reassurance from local investors that the market can support the school.
0
10
20
30%
30% Capacity
Utilization
10%
50% Capacity
Utilization
17%
70% Capacity
Utilization
21%
90% Capacity
Utilization
26%
2 4 2 1
Performance of
Branch Campuses
Threshold IRR Expected in
Developing Countries
0
20
40
60
80
100%
Capacity Utilization
for Schools of
4 or More Years
Since Start
Less than
70%
Capacity
Utilization
70%+
Capacity
Utilization
9
Years Since
Branch
Campus
Founded
4+ Years
Old
Less than 4
Years Old
18
First
Year
Enrolment
Target
Missed
Target
Met or
Exceeded
Target
18
Missed
First Year
Enrolment
Target
Missed by
30%+
Missed by
15-30%
15
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
9
Drivers of Enrolment at British Branch Campuses
~85% of enrolment in British branch campuses are children of expatriates. This of course differs by market, and in mature
markets such as Bangkok, locals can account for up to ~70% of total enrolment in British branch campuses. In countries
such as China, schools have to rely on the expatriate population in order to scale up.
EhrolmehI aI Brahch Campuses oI BriIish Schools: EpaIriaIes vs. AIIuehI Locals by CiIy, 2011
Source: Parthenon research and analysis
As the typical expatriate rotation is 4 years, 25% of the expatriate student base churns each year. The result is that
in a market such as Bangkok with a total 2010 enrolment of ~32,300 and ~30% as expats in premium international schools
(including British branch campuses) the annual number of students looking for seats is a combination of incremental market
demand (in Bangkok demand growth is ~900 expatriate children per year) and 25% of the existing expatriate student base.
The result is that ~3,300 students are up for grabs each year. Many branch campuses are opened with the assumption
that they can enrol a large percentage of both incremental market demand and churn in the underlying student base.

Incremental Market Demand and Expatriate Churn in Bangkok, 2010-2011
Note: Market is dened as >US$10
Source: Parthenon research and analysis
0
20
40
60
80
100%
Beijing
100%
Tianjin
100%
Shanghai
100%
Abu
Dhabi
100%
Dubai
100%
Astana
100%
Almaty
100%
Bangkok
A
f
f
l
u
e
n
t
L
o
c
a
l
s
E
x
p
a
t
r
i
a
t
e
s
100%
0
10
20
30
40K
2010
T
o
t
a
l
E
n
r
o
l
m
e
n
t
32.3K
Expatriates
Leaving
Bangkok
-2.4K
New Expatriates
Arriving
in Bangkok
2.4K
Incremental
Market
Demand
0.9K
2011
33.1K
Churn in the Market
Incremental Market Demand
Addressable
by New Market
Entrant
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
10
The data demonstrates that every branch campus has enroled a subset of incremental market demand. However,
there has not been a precedent where a branch campus has enroled more students than incremental market growth.
As a result, there is no demonstrated success of accessing student churn resulting in declining enrolment of competing
schools.
However, in most cases branch campuses of British schools have been able to add more incremental enrolment than the
largest competitor in the market, suggesting that British brands have value with parents in these markets and can attract
more incremental enrolment than a generic international brand. For example, Wellington College in Tianjin has been able to
attract 200 students in its rst year of operation, which is the highest number of incremental students added in that market
in that year (compared to 130 incremental students of the largest competitor).
Incremental Market Demand vs. Growth of Branch Campus of British School by City, 2010-2011
Note: Incremental growth for Bangkok includes Bromsgrove, Shrewsbury, and Harrow; capacity utilization for the three schools is ~90%
Source: Parthenon research and analysis
Understanding the role of market size and growth on enrolment potential is important as markets have different growth
rates and existing enrolment levels. In order to establish a successful branch campus abroad, it is important to evaluate the
target population (expats and afuent locals) and what incremental market demand is available given competition.
0
250
500
750
1,000
1,250
Abu Dhabi
1,100
550
Bangkok
900
100
Shanghai
650
180
Tianjin
550
200
Beijing
380
100
Incremental Market Demand
Growth of Branch Campus
of British School
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
11
Importance of Quantifying Market and School Enrolment Potential
Sometimes the market potential can be deceptive. For example, in a country like India with 290 million children of school-
going age, there are only 8,000 students enroled in premium international schools, 6,000 of which are children of expat
parents. Premium international schools in India are not running at high utilization, indicating oversupply in the market.

Enrolment of Premium International Schools in India, 2010
Source: Parthenon research and analysis
A city such as Bangkok can dwarf the whole of India in terms of the number of students enroled in premium international
private schools at comparable price points (above US$10K per annum) and demonstrates higher growth.
Enrolment at Premium International Schools Above US$10K in India and Bangkok, 2011
Investors need a rigorous approach to diligencing the market and understanding its potential in detail. Parthenon has
developed a proprietary framework that estimates market potential at the catchment level.
0
20
40
60
80
100%
By
Location
Urban
Rural
290M
By Type of
Ownership
Private
Private
Aided
Govern-
ment
51M
By Price
Point
$500-
$1K
Less
than
$500
14M
By
Curriculum
I
n
t
e
r
n
a
t
i
o
n
a
l
Indian
310K
By Price
Point
>US$10K
$5K-$10K
$1K-
$5K
128K
By
Nationality
Expat
Affluent
Local
8K
>US$1K
0
5
10
15
20K
All of India
8K
Bangkok
20K
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
12
Approach to K-12 Investments
K-12: Success in Schools Depends on Local Supply and Demand
K-12 education is a local catchment business. Unlike higher education, where students often move to another city to go to
college, K-12 students will travel within their neighborhood or city to go to school. Parthenon research shows that besides
location, price point, curriculum, and scale will largely determine the economic viability of the school.
Parthenon Proprietary K-12 Micro Market Analysis Framework
Parthenon has a proprietary approach to estimate market potential at the catchment level. This exercise analyzes potential
investment targets and new investment opportunities in K-12, as shown below.
Analysis of the local catchment area can inform investors about the size of local demand (that is, how many children in the
catchment area can afford a schools tuition fees), identify your competitors and give insight to the optimal capacity of the
school. In the early planning stage, investors need to test assumptions on school rollout, price points, and scale, or they
might end up having a school that does not run at full capacity or is nancially unstable.
Approach to Investments K-12
Parthenon Approach
Revenue
Market Size Fee Growth
Potential
Catchment
Enrolment Potential
School Enrol-
ment Potential
Scale Potential
of School
Catchment
Area Analysis
Competition
Benchmarking
Dene Market &
Competition
Key Outputs
Key
Considerations
t Enrolment numbers
t Tuition Fees
t Grades
t Curriculum
t Facilities and
infrastructure
compared to
competitors
t Parent satisfaction
t Drive times to
school and parent
preferences
t Income distribution of
settlement population
t Vacant seats at
competitor schools
t Expected share of
forecast demand
0
20
40
60
80
100%
City A
Target School
Outside
City A
School 1
Facilities
School 2
Target
School
School 3
Parthenon Perspectives
K-12 Southeast Asia: Seizing the Opportunity for British Schools Opening Campuses Abroad www.parthenon.com
13
Karan Khemka
Partner and Head of the Emerging Markets Education Practice
karank@parthenon.com
Ashwin Assomull
Partner
aassomull@parthenon.com
Abhinav Mital
Senior Principal
abhinavm@parthenon.com
Amit Garga
Senior Principal
agarga@parthenon.com
Danish Kamal Faruqui
Principal
dfaruqui@parthenon.com
Ayush Mathur
Principal
amathur@parthenon.com
Akshay Rathod
Associate
arathod@parthenon.com
For further information, please contact Parthenons Emerging Markets Education Team
Follow us on Twitter for regular updates on events, research, and reports

@edupractice
@karan_khemka
Report Development By:
The Parthenon Groups Emerging Markets Education Practice
1015 Raheja Chambers,
Free Press Journal Marg,
Nariman Point, Mumbai 400 021
India
+91 22 6744 2500
For more information about The Parthenon Group
and the work we do, please visit:
www.parthenon.com