In the past 12 months, Curro has acquired Grantleigh School in Richards Bay, Waterstone College in Johannesburg and most recently, its 41st: St Dominics, a school in Newcastle.
With this, Curro has reached its objective of 40 schools five years earlier than initially planned. The vision has shifted to 80 Curro schools by 2020.
Meanwhile, its smaller but older rival, AdvTech, is furiously playing catch up. On Tuesday the group announced the acquisition of Gaborone International School (GIS) in Botswana for R84 million.
This follows hard on the heels of its acquisition of the Maravest Group of schools for R450 million, announced in November, Kathstan College in October and Centurus Colleges – including Pecanwood College, Southdowns College and Tyger Valley College – announced in September.
In one six-month period, AdvTech has achieved more growth than it has in the past six years.
“These are not sudden deals,” says Leslie Maasdorp, who took over the CEO’s reins from Frank Thompson a month ago. “Frank and his team had been working on these for some time now.”
However, the “landgrab” for private schools cannot continue much longer, says Curro CEO Chris van der Merwe. “There are not that many good schools left to buy – I would say there are less than 10. And those that are in the market are looking for the highest price.”
Curro, he says, will not pay more than Ebitda (earnings before interest, tax, depreciation and amortisation) x12.
“We can build a top school for R100 000 and fill it in half the time it used to take us. Building from scratch is still the most profitable way to go.”
AdvTech plans to spend R3 billion over the next six to 10 years on organic expansion. However, unlike Curro, which plans to build 10 schools a year, it envisages two to three a year.
“Our schools division will see student numbers increase by 70% in 2015,” says Maasdorp.
The acquisition of GIS establishes the group’s first school outside South Africa. “We are seeing new schools opening all the time in East Africa, Rwanda, Kenya, Ghana and Nigeria.” But Maravest also launches AdvTech into the celebrated “low-fee, high-growth” arena. Here school fees range from R24 000/year to R36 000/year.
AdvTech’s move into sub-Saharan Africa appears to be a good step, a shareholder says, as long as it’s at the right price and margin.
Over the past 12 months, Curro’s stellar share price growth has moderated. It is trading on an historical PE of 152 and analysts expect earnings to grow.