Private equity firms seek education investments in Africa and emerging markets

THE opportunities for private sector involvement in education across Africa have never been greater. As many as one in four young Africans will be enrolled in some form of private education by the year 2021.

This is according to a study commissioned by Caerus Capital, which predicts that about 66 million youths are to be educated through private providers of education in the next five years.

The study went on to identify a $16 to $18 billion investment opportunity in Africa’s private education sector in the next five years alone.

Africa has been expanding educational provision significantly since the year 2000, bringing the net enrolment up from 60 percent to 78 percent. Patricia Ribeiro, an equity portfolio manager at American Century Investments, suggests this new dynamic is in line with the consumer spending (trend) in emerging markets where the population is looking to spend in areas such as education.

Despite this growth, however, much more needs to be done by governments to meet the rising demand for access to quality education at all levels.

At the Africa World Economic Forum summit held in Durban in May, participants were told that the future of education in emerging markets, within Africa and beyond, will be hybrid systems; a mix of public and private provision of higher education. In practical terms, some of this investment activity can already be seen across a number of countries in Africa, including South Africa.

While the South African private education market has historically been dominated by two publicly listed companies, AdvTech and Curro, it is interesting to note that a new pan-African platform has been created with two South African private higher education institutions included in the new platform.

The Management College of Southern Africa (Mancosa) and Regent Business School were recently acquired by Actis as part of the Honoris United Universities pan-African network.

Actis is reported to have spent R3.6 billion on the acquisition of six private institutions across Africa.

Hichem Ommezine, co-lead for Actis’s global education, said: “The private sector can play a significant role in filling this gap. Relying on consistent and quality teaching, private institutions can create greater access through the expansion of pan-African networks in traditional settings and via alternative methods, such as distance education or online learning.” - Ahmed Shaikh: Honoris United Universities

Business Report Editor’s note: We apologise for the error in reporting yesterday that the purchase price of R3.6 billion was for Mancosa. Rather, this is the total investment value for the acquisition of six institutions in the platform.