Ad­vtech bol­sters pres­ence in Africa

• Ed­u­ca­tion group buys pri­vate schools in Kenya and Uganda to grow num­bers, with aim of ac­quir­ing cen­tres through­out con­ti­nent

Business Day - - FRONT PAGE - Marc Hasen­fuss Edi­tor at Large hasen­fussm@fm.co.za

Ed­u­ca­tion group Ad­vtech has bol­stered its African pres­ence with re­cent for­ays into the pri­vate schools mar­ket in Kenya and Uganda. On Tues­day, the com­pany, which owns the Crawford Col­leges, Trin­ity House and Ab­botts pri­vate school brands in SA, con­firmed the ac­qui­si­tion of the Makini group of schools in Kenya.

Ed­u­ca­tion group Ad­vtech has bol­stered its African pres­ence with re­cent for­ays into the pri­vate schools mar­ket in Kenya and Uganda.

On Tues­day the com­pany, which owns the Crawford Col­leges, Trin­ity House and Ab­botts pri­vate school brands in SA, con­firmed the ac­qui­si­tion of the Makini group of schools in Kenya for an undis­closed sum.

The deal seems well timed, with Ad­vtech set to open its first Crawford In­ter­na­tional School in Nairobi in Septem­ber.

Ad­vtech made its first move into the rest of Africa in late 2014 when it ac­quired the Gaborone In­ter­na­tional School in Botswana for R84m.

The Makini group, which was founded in 1978, op­er­ates eight schools on four cam­puses in Nairobi and Kisumu. The schools cater to 3,200 pupils from kin­der­garten to grade 12.

The deal fol­lows the es­tab­lish­ment of a new part­ner­ship be­tween Ad­vtech and Sc­hole, which has man­aged var­i­ous schools in sub-Sa­ha­ran Africa since 2012.

Ad­vtech CEO Roy Dou­glas said the new part­ner­ship would look to ac­quire schools across the con­ti­nent with an aim of build­ing a net­work in the mid­fee seg­ment.

Ad­vtech holds a ma­jor­ity stake, with the re­main­ing share­hold­ing held by the orig­i­nal founders of Sc­hole In­ter­na­tional and Caerus Cap­i­tal, an ed­u­ca­tion con­sul­tancy group. The part­ner­ship will also man­age Kisubi High School, a co-ed mid-fee board­ing school in Kam­pala, Uganda, with 900 pupils.

Dou­glas said Ad­vtech had been dili­gent in its in­ves­ti­ga­tions to se­cure the right busi­ness part­ners to help sus­tain­ably grow the com­pany’s mid-fee of­fer­ing and in­crease ac­cess to af­ford­able ed­u­ca­tion in the rest of Africa. “It is im­por­tant to iden­tify part­ners who know and un­der­stand the lo­cal mar­kets, with ex­ten­sive ex­pe­ri­ence in op­er­at­ing schools through­out East Africa. We are con­fi­dent that we have as­sem­bled the best team pos­si­ble,” he said.

The African thrust comes at a time when growth has slowed at Ad­vtech’s school di­vi­sion.

In the year to end-De­cem­ber, the di­vi­sion re­ported a 14% growth in rev­enue to al­most R1.9bn, with nor­malised op­er­at­ing profit in­creas­ing 3% to R330m. At the time, Dou­glas said that cer­tain schools were af­fected by the fi­nan­cial pres­sure on con­sumers and high lev­els of em­i­gra­tion.

About 11% of Ad­vtech’s rev­enue was gen­er­ated in the rest of Africa in the past fi­nan­cial year. Dou­glas, how­ever, re­cently said the com­pany, which also has a size­able ter­tiary ed­u­ca­tion arm, was on track to meet a 2020 tar­get of gen­er­at­ing 30% of rev­enue from African oper­a­tions.

An­thony Clark, an an­a­lyst at Vu­nani Se­cu­ri­ties, said the ac­qui­si­tion by Ad­vtech of new schools was a pos­i­tive strate­gic move that aug­mented the com­pany’s ex­ist­ing ex­pan­sion plans into Africa. “The schools be­ing ac­quired could be ‘feeder schools’ into the new Crawford In­ter­na­tional cam­pus that is be­ing built in Nairobi,” he said.

IT IS IM­POR­TANT TO IDEN­TIFY PART­NERS WHO KNOW AND UN­DER­STAND THE LO­CAL MAR­KETS

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