Investec bets on education crisis and sets eyes on health care

Investec Asset Management’s private-equity unit plans to use its first investment in education as a springboard for a wider foray into the sector, which could be followed up with a deal in the health-care industry.

The Cape Town-based money manager is seeking to benefit from growing demand for private education in SA as the public school system deteriorates It also wants to use education and health care to capture an increased share of consumer spending being spurred by a rising middle class across the continent. The fund already has interests in 12 companies across industries ranging from transport and logistics to gas and technology.

The buyout unit said last week it had invested an undisclosed amount in Richfield Holdings to gain control of the owner of 40 tertiary campuses countrywide with about 20,000 students. Companies such as Stadio Holdings and Advtech are already bulking up to take advantage of the nation’s private higher education demand, with the latter planning to deepen its investment with a takeover of the local unit of Australia’s Monash University.

“One of the interesting dynamics in SA is that in the public sector, which accounts for the vast majority of tertiary education in terms of public universities, there have been capacity constraints,” said Nick Marsh, investment principal at Investec Asset Management.

Richfield plans to build scale outside SA using a distance-learning model and through new acquisitions in Namibia and the Democratic Republic of the Congo, where it is in talks with potential partners, Marsh said.

Investec has also turned its gaze on health care, while growing its exposure in the retail, financial services and technology sectors with “a number of opportunities in the pipeline”, Marsh said. The fund, started a decade ago, typically buys into businesses that require an initial sum of $15m-$80m, according to its website.

Investec Asset Management, which has more than $142bn in assets, is in the process of being split from the group’s private bank and wealth manager to unlock value for investors. Bloomberg