Marc Hasenfuss Editor-at-large
Picture: JSE
Picture: JSE

It was widely expected that PSG Group’s next private education venture on the JSE would be the listing of its Impak distance-learning initiative.

But when it comes to the adventurous PSG, it’s best to anticipate a curve ball.

Still, news last week that Curro Holdings, PSG’s fast-growing private education arm, could list its fledgling tertiary operations separately on the JSE took many by surprise. The development, though, is likely to get shareholders in both the PSG and the Curro camps fidgeting excitedly in their seats.

Giving consideration to a listing for the tertiary arm suggests that education visionary and Curro CEO Chris van der Merwe sees an opportunity to emulate the company’s rapid rollout of private schools in the tertiary space.

Curro is one of the hottest stocks on the JSE, trading on a forward earnings multiple of more than 100 times.

The market — mainly excitable retail investors at first — has been enthralled by the successful and increasingly profitable rollout of well over 100 private schools.

The fact that the rollout and selected acquisitions have gone off without any discernible hitches — and that some schools’ profits are zipping up the J-curve — should stand Curro in good stead.

Shareholders, who have forked out billions of rand in a handful of rights issues since the 2011 listing, will certainly be most willing to back a tertiary offshoot. And others will not want to miss out again on a chance to get in at the ground floor.

It’s a great time to push a private tertiary offering. The persistent disruptions at several mainstream campuses under the broader #FeesMustFall banner can only fan enthusiasm for Curro’s efforts to market quality, affordable private tertiary offerings.

Picture: ISTOCK
Picture: ISTOCK

A final decision to separate out the tertiary portion will also provide reassurance that Van der Merwe — who has already set up a separate executive committee for the tertiary business — is determined not to risk losing any hard-won leverage in the burgeoning private school market. He is very clear that the private school and tertiary markets are vastly different in terms of human resources and infrastructure.

The last thing Curro shareholders would want is the school’s division to lose traction because management is distracted by tertiary endeavours.

The big question, of course, is whether Curro’s tertiary division will be grown organically or by acquisition. The company’s listed rival, AdvTech, already has a sizeable tertiary segment that is both well diversified in terms of brands and curricula, as well as being highly profitable.

Curro is one of the hottest stocks on the JSE, trading on a forward earnings multiple of more than 100 times

Gut feel is that Curro will initially use its Embury teacher’s training brand as a beachhead for further advances in the tertiary space.

At this point it appears Curro is bent on a private university model, which entails securing accreditation for a bouquet of degrees.

But niche offerings will surely be on the cards and — considering the fragmented nature of private tertiary offerings — present numerous acquisition opportunities.

The appetite for acquisitions should be apparent when the capital raising aspect of
the mooted separate listing is detailed for the market.

Unlike Curro, which has raised fresh capital every year since listing in 2011, the tertiary arm has a golden opportunity to raise a considerable sum upfront.

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