ADvTECH enters low-fee school market

File picture

File picture

Published Nov 26, 2014

Share

Johannesburg - ADvTECH plans to buy Maravest Group for 450 million rand to add low-fee private schools around Johannesburg and Pretoria to its offering of independent education services in South Africa.

The transaction will be settled through a combination of shares and cash at a ratio yet to be determined, Johannesburg- based ADvTECH said in a statement today.

The company will seek permission from investors to issue as much as 55 million shares at 7.82 rand each.

The acquisition will bolster ADvTECH’s school division by 32 percent, adding more than 4 400 pupils from nursery to high schools at six different sites.

Leslie Maasdorp, who started as chief executive officer on October 24, is seeking lower fee schools as South Africa struggles to improve education in the wake of apartheid.

The chief executive is also looking for opportunities to bolster the company’s existing schools, colleges and universities and enter new markets, such as Kenya and Nigeria.

“We’re embarking on an acceleration path of our investment and growth story,” Maasdorp said in an interview from Johannesburg.

“This acquisition is very much a part of that.”

ADvTECH slid 1.8 percent to 9.07 rand by 3:19 pm in Johannesburg, paring the stock’s gains this year to 38 percent, compared with an 8.8 percent advance in the FTSE/JSE Africa All Share Index.

Curro Holdings, which also operates private schools, dropped 6.6 percent in 2014 after rallying 82 percent in 2013.

The purchase won’t be funded from a 3 billion-rand program ADvTECH set aside for capital investments into existing and new facilities, Maasdorp said.

The company is looking at its balance sheet and financing needs and will make an announcement once it has decided on an approach, ADvTECH said.

 

‘Concrete Step’

 

The acquisition also includes Maramedia, a company that creates and distributes digital curriculum for preparatory and home schools, ADvTECH said.

Three of the schools in the deal are high-fee schools, two of them have lower charges, while Maravest also has a management contract with another lower-fee facility, the company said.

“Up until now ADvTECH has been known to occupy the premium end” for private schools, Maasdorp said.

“This is now the first concrete step into the lower space.”

While margins are lower, the company is able to compensate for that with higher volumes, he said.

“There’s much, much bigger growth anticipated in the private-school market,” Maasdorp said. “More and more people who’ve moved into the middle class can afford private education.” - Bloomberg News

Related Topics: