Curro slides 10% on spin-off of higher education arm Stadio
Curro CEO Chris van der Merwe says Stadio will use the listing to gain access to equity and debt capital
The Curro share price slumped 10% to a 52-week low of R35.38 on Tuesday following the spinning off of its higher education business Stadio into a separately listed entity. Stadio was listed on Tuesday and began trading at a subscription price of 555c.
In February Curro, the country’s biggest private education firm, informed shareholders it would float its tertiary education business separately.
It said it would unbundle shares in Stadio to its own shareholders on a one-to-one ratio. Stadio planned to raise R640m through the rights offer.
Curro CEO Chris van der Merwe said Stadio would use the listing to gain access to equity and debt capital to expand the existing business and support the greenfield development of new campuses.
Van der Merwe said SA had to accommodate another million students in higher education if it wanted to compete with global trends.
“In this regard, we believe Stadio can grow over time from the current 13,000 students to more than 100,000 students and, in doing so, provide SA with well-qualified and equipped citizens who can help this country to achieve acceptable economic growth levels once again.”
In the six months to end-June, Stadio’s revenue increased 26% to R24m but operating profit fell 33% to just R6m and headline earnings slumped to a R3m loss.
The management attributed the poor profit performance to expansion-related costs. Curro Schools, the major portion of Curro’s business, performed strongly in the six-month period with a 28% increase in revenue to R915m and a 64% hike in headline earnings to R128m.
Pupil numbers increased 20%, to 36,228.
* This article was amended to indicate that the subscription price was 555c