Curro proposes fifth rights offer
Education company aims to raise R740m
CAPE TOWN — Fast-growing private education group Curro Holdings, which aims to have at least 80 schools by 2020, is embarking on its fifth rights offer in as many years.
Since listing in 2011, Curro has raised R1.9bn in rights offers, with anchor shareholder PSG, a handful of institutional shareholders and a multitude of excitable small shareholders proving willing backers.
Yesterday’s proposals on a R740m offer pitched at R25 per share will bring the collective fundraising tally to R2.6bn — an astounding figure considering Curro’s revenue for the year to end-December only just broke through the R1bn mark.
The latest rights offer was proposed despite Curro more than doubling its operational cash flow to R247m.
Lentus Asset Management analyst Nic Norman-Smith said Curro management was astute in taking advantage of the market’s infatuation with the business. Curro’s shares have increased more than fivefold on the JSE since mid-2011.
Curro has found a sweet spot in the local economy in trying to offer affordable private education. SA’s education system was
ranked the fifth-worst of 144 countries in last year’s World Economic Forum survey — playing into the hands of the purveyors of private education.
Mr Norman-Smith said raising capital at these elevated levels was a smart move.
“They are certainly following in the footsteps of anchor shareholder PSG, which has implemented similar moves with both its own company and market darling Capitec.”
The rights offer has been pitched at a 24% discount to the share price, which reflects one of the most strenuous multiples on the JSE at 183 times.
Vunani Securities analyst Anthony Clark said the discount was narrower than in previous fundraising exercises.
“That suggests Curro think they will have no trouble getting the rights offer away.
“I think the company is determined to leave some powder dry to give them enough room for major acquisitions … and to counter an immediate threat from a more expansionary Advtech,” its rival in the sector.
The rights issue news coincided with the release of results for the year to end-December, which showed headline earnings rose 38% to 17.7c per share. Curro has nine schools with nearly 13,500 pupils. The schools are operating at 75%-100% capacity.
Curro CEO Chris van der Merwe reiterated that the goal of 80 schools by 2020 remained on track. “We have 42 campuses with more than 36,000 learners … we achieved our original prelisting aim of 40 campuses by 2020 five years ahead of schedule.”
Dr van der Merwe said plans for this year included an investment of about R600m in existing campuses to accommodate new enrolments. He said Curro could also invest up to R250m in land-banking key sites, and that potential acquisitions would be investigated.