Advtech details takeover bid for private university Monash
The education conglomerate has prepared detailed takeover proposal for the private university with Australian roots
Bigger players are snapping up small private universities as they take advantage of the demand for higher education.
Education conglomerate Advtech on Tuesday detailed a takeover proposal for private university Monash South Africa (MSA), reinforcing notions that demand for private tertiary offerings is set to increase markedly in the years ahead.
Both Advtech and smaller rival Stadio Holdings have looked to capitalise on this trend by aggressively seeking out takeover opportunities.
Earlier in September Stadio CEO Chris van der Merwe noted there were about 167,000 students enrolled at private higher education institutions in SA compared with 1-million students enrolled at public universities. He argued that public universities had limited infrastructure and state subsidies to cater for this growing need.
Specifically, Van der Merwe argued that with the National Development Plan’s aim of 1.6-million students by 2030, further capacity to accommodate an additional 300,000 to 500,000 students was needed.
MSA, which has its roots in Australia, is a joint venture between Monash University and Laureate Education, the world’s largest private higher education network.
MSA will slot in with Advtech’s existing tertiary brands like Varsity College, Rosebank College and Vega.
The deal follows a slew of corporate activity in the private tertiary education sector by Advtech and Stadio Holdings. Recent acquisitions by Advtech have included Capsicum Culinary Studio, The Private Hotel School and Oxbridge Academy.
Stadio has snapped up the Milpark business school as well as specialist brands like CA Connect, which focuses on accounting, South African School of Motion Picture Medium and Live Performance (AFDA), Southern Business School (SBS) and fashion design and retail LISOF.
Advtech will pay R343m (up to a maximum of R500m depending on cash on hand and working capital adjustments at the date of transfer) for the West Rand-based MSA, which has a capacity for 6,500 students.
The acquisition will boost Advtech’s tertiary student complement to more than 40,000 full-time and 30,000 distance students.
MSA’s net asset value as at the end of 2017 was reckoned at around R330m, with profit after tax of almost R10m.
A market source who asked not to be named speculated that MSA’s profitability under Advtech might improve dramatically. “One has to assume there will be big opportunities to streamline the business.”
Advtech CEO Roy Douglas confirmed significant synergies had already been identified and were expected to benefit the enlarged group.
Demand for private tertiary education offerings has increased in recent years as learners battle to qualify for limited places at the traditional universities or look for more affordable options or just prefer to pursue specialised non-university training courses.