Private education group Curro Holdings plans to spend R400 million building six new campuses in the 2018 financial year. The move will see the PSG-controlled company expand its low-fee private school offering in South African townships.
After the release of Curro’s interim results for the six months to end June 2018, CEO Andries Greyling said new greenfield developments and expansion investments are on the cards in townships including Gauteng’s Soweto, Soshanguve, and Mamelodi.
This is part of Curro’s more than R2 billion capital expenditure budget earmarked for new greenfield developments, investments in existing schools, and possible acquisitions.
Curro’s push into the lower-fee private school market has been many years in the making. The 22-year-old company’s move into academy schooling prompted JSE-listed rival Advtech to do likewise; it has been seeking opportunities in this market since 2014.
Curro currently operates Curro Academy lower-fee private schools in townships including Protea Glen in Soweto, and Pretoria’s Soshanguve and Mamelodi. Protea Glen is one of the townships earmarked for a new campus under the new investment.
Greyling said Curro is responding to the demand from parents for quality and low-fee private education.
In a township like Soshanguve, parents would enrol their children at public schools with 50 pupils in a classroom at a general cost of between R2 000 to R3 000 a month, he said. Meanwhile, parents could spend between R1 800 to R2 800 a month to enrol their children at Curro Academy schools in townships, with 35 pupils in a class. In contrast, Curro’s high-fee schools cost an average of R4 500 a month, with 25 pupils in a classroom.
“Our biggest growth is the Curro Academy as we are the only players in some of those township markets, and we are seeing good growth [in terms of enrolments],” Greyling told Moneyweb.
He has the statistics to back this up. Private school education over the past four years has grown from 2% to 6% as a percentage of the total number of enrolled pupils in SA – about 13 million (from grade 1 to 12), said Greyling.
“We need more schools due to the pressures of urbanisation … The biggest challenge in SA is the number of schools that need to be built in order to reduce the number of learners in a class to focus on quality education.”
Curro is in a race to achieve its 80@20 vision of having 200 schools on 80 campuses by 2020. For the six months to June 2018, Curro grew the number of its learners by 10% to 50 691 at 139 schools and 57 campuses.
Greyling said Curro’s 80@20 vision is achievable given its three recent acquisitions of Gaborone-based Baobab Primary School, Douglasdale-based Cooper College, and Dot’s Learning Centre in Cape Town. The greenfield development of six new campuses will also build capacity, while five possible acquisitions could be concluded at the end of this financial year to December.
By the start of 2019, Curro aims to have grown the number of its campuses from 57 to 70.
Curro, which is no stranger to raising fresh capital through a rights offer, might rely on debt utilisation to fund its expansion plans. Greyling said debt levels will be reasonably managed.
Curro’s overall revenue grew by 18% to R1.24 billion compared with R1.05 billion for the six months to June 2017. Headline earnings per share grew by 25% to 33.6 cents from 26.9 cents.
The private education group’s shares, which trade at a hefty earnings multiple of over 60 times, finished 0.58% lower on Tuesday at R31.05.