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New schools listing headed for AltX

Pembury Lifestyle Group will list its schools business.

South Africa’s listed education sector is about to get busier with the imminent listing of PLG Schools, part of the Pembury Lifestyle Group, on the JSE’s Alternative Exchange.

It will join the likes of main board listed Curro, AdvTech and property specialist Trematon, which has a fledgling schools division.

Founded in 1999 and initially focused on developing retirement accommodation the Pembury Lifestyle Group stepped into the schools space in 2014 when it acquired a piece of land more suited to a school than a retirement complex.

Over the last two years PLG Schools has grown from one campus, comprising three schools, to seven campuses with 19 schools in 2017.  A campus generally includes three schools comprising Pre-primary, Primary and High School.

Growth of the business

Year

Number of campuses

# of schools

# of pupils

2015

2

6

420

2016

5

15

1 100

2017

7

19

2 200

 

The company is deliberately targeting the ‘affordable’ schooling space with fees ranging from R18 000 to R54 000 per learner, per annum. These fees are comparable to or just higher than the fees at many government schools. The focus is on mid-sized campuses with 600 – 1200 learners per school and no more than 25 to a class.

“Our vision is to make independent, quality education accessible and affordable to more communities across South Africa, driving development forward,” says Pembury Lifestyle founder and CEO, Andrew McLachlan.

Affordable fees do not mean large classes or education-by-computer; rather, competitive efficiencies in capital utilisation allow for smaller classes taught by experienced educators.

For instance, PLG Schools uses existing structures in prime locations. Properties are converted and can open within six months. In addition, overheads have been reduced by the inclusion of action sports (rather than catering for swimming, tennis, hockey and so on) These are part of PLG Schools sports-for-life ethos and include action cricket, action netball, action soccer and action hockey.

Private schooling, while delivering better results for learners in many instances, remains unaffordable to the majority and provides education to just over 500 000 students out of a total learner population of 12.4 million. According to McLachlan fees are 15-25 % less than those of the nearest competitor and learners follow the IEB or CAPS curriculum.

“Our vision is to offer a quality, affordable private education to all South African children built on a solid Christian Foundation,” he says.

PLG Schools currently operates in Gauteng and the North West Province. In 2017, the group will open three new campuses in Centurion, Roodepoort and Springs; taking the number of campuses to seven, with 19 schools therein. McLachlan expects this to increase this to 19 campuses and about 55 schools by 2022, growing by at least three campuses per year.

PLG School Northriding

PLG School Northriding

Like its bigger peers, which are already invested in tertiary education, PLG Schools intends expanding into tertiary education with PLG Tech Colleges. This is targeted at alleviating the critical shortage of technically qualified people – less than 20% of the country’s matriculants enter university. “We see enormous potential for this type of post-matric qualification,” McLachlan says.

But the first step in this process is to list PLG Schools, which will include the underlying properties for each school site. 

The retirement lodge portfolio will potentially be acquired at a later stage, dependent on investor appetite.  

“This first step positions us for future growth and structures the company appropriately for the acquisition of additional properties for the roll out of school campuses,” says McLachlan. 

PLG Schools aims to raise around R140 million in external capital to fund the growth aspirations of the group, which include adding several new school campuses to its portfolio, as well as a property division in the future.

In the financial year ending February 29 2016, PLG Schools generated revenue of over R19 million and EBITDA of R7.27 million. Revenue is derived from monthly fees, non-refundable registration fees, monthly aftercare fees, monthly boarding fees and other opportunities such as transport services.

“The listing will not only assist in the funding for this expansion, but we will be able to offer our shareholders confidence and transparency through the AltX environment,” says McLachlan. The company anticipates growth of three campuses per year between 2016 and 2020.

A prospectus will be made available in due course.

PL Group has appointed Arbor Capital Sponsors as the designated advisor to advise on the listing.

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Igor Rodionov

Igor Rodionov

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That’s quite an eye-watering multiple there, at raising R140m (for less than a 100% stake) off EBITDA earnings of R7.3m…

Will be interesting to see the prospectus when it comes to market.

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