Listed education groups offer lessons in how to invest wisely

Among the plethora of private school brands that have emerged in South Africa in recent years, just two have listed on the JSE: Curro Holdings and Advtech.

Both have entrenched their positions with expanded infrastructure, increased pupil numbers and improved revenue.

Having listed on the local bourse in 2011, Curro dominates the sector with a compound annual growth rate of 48% and a market cap of more than R20-billion.

The company, which is 52% owned by the PSG Group, nearly doubled the number of schools it had from 61 in 2012 to 110 last year, registering some 41393 children in its primary and high schools.

story_article_left1

Last year the number of pupils registered rose 15% from the year before, despite school fees increasing by 9.9% on average.

Curro's smaller rival, Advtech, whose share price has risen more than 180% over the past five years, now owns 81 schools, including those in the Abbotts College and Crawford Schools stables.

The value of the expansion is evident in Advtech's latest interim results, for the six months ended June 30 2016, which showed a 28% increase in revenue as a result of recent acquisitions and increased enrolment.

Advtech and Curro have in recent years both been raising cash to invest in more schools.

In 2015, Curro pursued its smaller rival but was rebuffed. Speculation still swirls that the larger company will return with another offer.

Nolwandle Mthombeni, an equity analyst at Mergence Investment Managers, said the imminent listing of a new player in Pembury Group, which runs 19 schools, would change the game in the listed property sector.

In December last year the group started an application to list on the AltX, which is expected to happen this month.