Sign up for our free daily newsletter


Get the latest news and some fun stuff
in your inbox every day

Curro announces big school push

You know the saying "good things happen to good people". Well sometimes good things happen to good companies. And I don't mean good as in well run. I mean good in the context of performing a good service which helps build our nation. Yesterday Curro, the private schooling company made an announcement headed Curro, PIC and Old Mutual join forces to expand quality low-fee schooling.

It is a joint venture between Curro and the OMIGSA schools fund. This fund is backed by the PIC and Old Mutual and has financing of up to R397.1 million. Curro will add a further R42.9 million bringing the fund to R440 million. The purpose of the fund is "to play a supportive role to Government in addressing the educational needs of South Africa in the lower income market and to put in motion the objectives set out in Curros pre-listing statement."

This is how the fund will work according to the announcement. "The joint venture includes the incorporation of an operating company that will operate schools, to be known as the Meridian Independent Schools, and a property owning company, held 65% by Curro and 35% by the OMIGSA Schools Fund, that will provide the school facilities and premises for the schools, with Curro being appointed as the manager of the schools. The Meridian Independent Schools will focus on providing private schooling to students where the majority of parents earn less than a defined threshhold, currently R200 000 (two hundred thousand Rand) per annum."

So basically they are putting in 10% of the capital but owning 65% of the fund. Sounds too good to be true not so? This Moneyweb interview with CEO Chris van der Merwe explains it very well. You see what he says right at the end there. Curro have specialised expertise to manage the schools and that is where their bargaining power comes in. Old Mutual and the PIC get good PR for investing in a project which will benefit our nation. In fact many say education is the core solution to most of our problems. I agree.

It is also important to note that through this fund Curro are targeting the lower to middle income bracket. This is where the gap seems to be in the market and where we see future growth in this sector. Like I mentioned earlier, this is also a good example of why we like to invest in positive themes that are seen favourably by government and the public. I can't see this kind of a deal being struck with a Tobacco company. All in all this is a fantastic deal for Curro and a great deal for the nation and the 100 000 children who stand to benefit.


Other recommended stocks     Other stories about COH