DUBAI: Dubai school operator Taaleem is in preliminary talks with banks for an initial public offering in Dubai, two sources told Reuters, a transaction that would test market appetite for UAE’s education sector.

The private education sector in the United Arab Emirates (UAE) is recovering from a slowdown during the peak of the coronavirus pandemic. Schools have been under pressure with higher operational costs and families departing from the UAE in the first year of the pandemic or opting for remote learning at schools abroad.

The Dubai government last week decided to freeze tuition fees for the year 2022-2023, its third year in a row to help ease the financial burdens on parents.

Taaleem, one of the largest providers of early childhood, primary and secondary education, did not respond to a Reuters request for comment.

Talks are ongoing and no final decision has been made over the potential transaction, the sources said.

In a report to clients, ratings agency Moody’s last month said the tuition fee freeze was credit negative for Dubai’s largest education provider Gems.

“The announcement contrasts with the wider economic growth and inflationary environment in Dubai and the UAE.” Moody’s also said Abu Dhabi’s education authority did not yet provide information on whether schools would be allowed to hike tuition fees for the coming academic year.