Curro plans split JSE listing
Curro Holdings, the fastgrowing private education specialist controlled by PSG Group, is preparing its fledgling tertiary education operations for a listing on the JSE.
Business Day confirmed on Tuesday that Curro had split its executive committee to focus separately on the company’s schools and tertiary offerings.
Curro, which listed on the JSE in 2011 and now carries a market capitalisation of R18.5bn, earns most of its keep from its private schools division. But the company owns teacher education specialist Embury, which also offers accredited degrees in various subjects.
In 2016, Embury signalled its intention to broaden its tertiary offering by acquiring a 50% stake in BA Isago University in Botswana.
Curro CEO Chris van der Merwe confirmed a separate listing for the tertiary segment was under discussion. “We have been speaking about this for a while, but we’re not 100% sure when we will actually do it. It’s still early days.”
Curro saw strong prospects in the private tertiary space. “Our gut feel is that our tertiary offering has potential as a listed entity. We don’t want to rush things, though.
“The splitting of the executive committees should inform us better on whether we should list the tertiary business.”
Van der Merwe stressed the splitting of the executive committee was necessary to ensure that while the tertiary component was being built up, there was no risk of management losing focus on the rapid private school roll-out, which has reached 110 schools at the end of June 2016.
“A tertiary offering requires different resources. We now have two executive committees in different buildings.”
Market watchers were not totally surprised by the possibility of a separate listing, with most noting that rumours around a tertiary push had intensified in recent weeks.
Most agreed that Curro had strong backing from PSG and certain sectors of the market, and an effort to raise capital for a tertiary offering would probably be well supported.
Significantly, Curro, in support of its vast growth ambitions, has managed to hold a sizeable rights issue every year since
listing. The share trades on a demanding trailing earnings multiple of more than 100.
Lentus Asset Management chief information officer Nic Norman-Smith said it was not uncommon for PSG to push for listings of its investments, which ensured a transparent incentive plan for management.
Norman-Smith also believed it was a smart time to raise capital for a private education venture. “These businesses are hugely capital-intensive, so it’s nice to raise as much money as quickly as possible. There will be a payback … remembering fees are paid upfront.”
Van der Merwe believed Curro’s tertiary plans could see as many as 80,000 students accommodated in the longer term. “I am sensitive to commit to a specific timeline in terms of possible student numbers. But from our schools division, we see many solid students — that don’t get 80% to 90% aggregates — not being accommodated at mainstream universities. We can make space for them.”
Advtech, Curro’s rival on the JSE, already has a sizeable tertiary offering that includes the high-profile Varsity College as well as specialist offerings such as business, catering and advertising.
Advtech’s tertiary division generated revenue of R593m in the half-year to end-June and posted operating profits of R100m.
Van der Merwe said Curro would move its tertiary offering in the direction of a private university, which would mean offering a spread of degrees.
“We will never be a UCT, Maties or a UJ … but there’s definitely space for a niche university offering, where 1,500 to 4,000 students can be accommodated,” he said.