Curro sets sights on 500 schools

26 Jun 2017

Fast-growing private education business, Curro Holdings, which investment company PSG Group controls, has set a longterm expansion target of 500 schools by 2030.

Outgoing CEO Chris van der Merwe disclosed this at the annual meeting in Stellenbosch on Friday, 23 June 2017. Van der Merwe - who will now head Curro's tertiary education spin-off, Stadio Holdings - said the private school market in SA lagged those in other countries globally, where independent schools made up nearly 20% of the total number of schools, compared with just 4.4% in SA.

"If SA follows this trend, there is huge potential for many more independent schools to be developed," he said.

Curro CEO designate Andries Greyling said the group would open two Curro Castles (preprimary schools) in Oakdene (Gauteng) and Uitzicht (Cape Town) in 2018, as well as three Curro Academy campuses in Sunningdale (Cape Town), Riverside and Mamelodi (both in Gauteng).

He said Curro would concentrate its expansive efforts in the Western Cape, Gauteng and KwaZulu-Natal provinces and would consider expanding into other regions via acquisition.

Van der Merwe said Curro had increased pupil numbers by a compound growth rate of 31% since 2012, with revenue and earnings increasing at a compound growth rate of 48% and 83%, respectively over the same period.

Curro's operating margin, which had grown from 23% in financial 2012 to 29% in 2016, could settle between 30% and 40% in the medium term.

Van der Merwe said if Curro stopped building schools its existing 127 schools were at just 52% capacity. "We could accommodate a massive amount of learners." As regards Stadio's tertiary ambitions, he said plans were under way for a large and diverse institution of higher learning, a "multiversity" with centralised functions.

Van der Merwe said Stadio's target for 2017 was to have 13,000 students at the firm's listing in the third quarter, with a medium-term target of 35,000 pupils and a longer term vision of 65,000.

Anthony Clark, an analyst at Vunani Securities, said that the tertiary education sector was ripe for consolidation and that a number of Stadio rights issues were likely to fund acquisitive growth.

There were 117 independent tertiary businesses in the country servicing 147,000 pupils, Clark said.

"Only 15-20 would be in Stadio's cross hairs," he said.

Curro gained 1.6% on Friday to close at R43.10. The stock is down more than 14% in 2017.

Source: Business Day

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