Making the grade
Trematon Capital brings new private school brand to SA
Education appears to be a red-hot sector on the JSE at the moment, but investment company Trematon Capital won’t pursue a JSE listing before building critical mass
Education appears to be a red-hot sector on the JSE at the moment, but investment company Trematon Capital is not going to push forward the timetable for listing its Generation Education private schools subsidiary.
Despite an encouraging start, indications are that Trematon will build critical mass before mulling an exercise to float the fledgling business on the JSE.
The JSE’s two largest private education companies, Curro Holdings and AdvTech, command compelling earnings multiples.
Pembury Lifestyle Group — which offers no-frills, low-fee private education — listed on the JSE last month, and Curro is set to unbundle its tertiary education subsidiary, Stadio Holdings, later this year.
In its half-year to end-February results, Trematon reported "pleasing growth" from Generation, with its first school in Sunningdale (near Milnerton in Cape Town) oversubscribed.
Revenue was up almost fourfold to R8.5m, which was whittled down by start-up and development costs to a pretax loss of R1.7m. But the value of Generation’s assets doubled to R47m.
Trematon CEO Arnold Shapiro says the school’s capacity is being increased from 250 students to 480 students. A second operational site in Hermanus was acquired last year and converted to a Generation Education school in January.
Shapiro says phase one of the expansion of the school is already under way. "When completed, the school will have capacity for 255 learners with a possible further expansion to 500 learners."
He says two additional sites have been purchased — one an operational school in Melkbos that will be rebranded, and a second site in Noordhoek, which is subject to a rezoning application.
He confirms further sites are in various stages of investigation and negotiation. The land banking function, which is critical to private school roll-outs, is helped by the fact that Trematon’s main investment expertise lies in property.
Shapiro points out that Generation schools, which are based on Montessori teaching principles, do not require huge outlay and can be developed fairly quickly.
He says Trematon would be disappointed if Generation could not double the number of schools in operation by the end of the 2019 financial year.
* The writer holds shares in Trematon