ADVTECH plans to buy the Maravest Group for R450m to add low-fee private schools around Johannesburg and Pretoria to its offering of independent education services. The transaction would be settled through a combination of shares and cash at a ratio yet to be determined, Johannesburg-based Advtech said in a statement on Wednesday.
The company would seek permission from investors to issue as many as 55-million shares at R7.82 each.
Advtech’s share fell 2.5% to R9.01 on Wednesday, paring the stock’s gains this year to about 38%.
Curro Holdings, which also operates private schools, has lost 6.6% this year after rallying 82% last year. The acquisition would bolster Advtech’s school division by 32%, adding more than 4,400 pupils from nursery schools to high schools at six sites.
Leslie Maasdorp, who started as Advtech CEO on October 24, is seeking lower-fee schools as SA struggles to improve education in the wake of apartheid.
The CEO 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,” Mr Maasdorp said. “This acquisition is very much a part of that.” The purchase would not be funded from a R3bn programme that Advtech had earmarked for capital investment in existing and new facilities, Mr Maasdorp said.
The company was looking at its balance sheet and financing needs and would make an announcement once it had decided on an approach, Advtech said.
The acquisition included Maramedia, a company that creates and distributes digital curricula for preparatory and home schools, Advtech said.
Three of the schools in the deal were high-fee schools, two had lower charges, while Maravest also had a management contract with another lower-fee facility, Advtech said.
“Up until now, Advtech has been known to occupy the premium end” in private schools, Mr Maasdorp said. “This is now the first concrete step into the lower space.”
While margins were lower, the company was able to compensate for that with higher volumes, he said. “There’s much, much bigger growth anticipated in the private school market,” Mr Maasdorp said.
“More and more people who’ve moved into the middle class can afford private education.” Source: Bloomberg