Curro with another acquisition

If you are a Curro shareholder you will know that they have raised some money from you a few times over the last few years. You should also know that if you had followed your rights and given them the money it will have been money well invested (so far). The share price reached R25 today after trading at and around R20 a few months ago. Well you will be happy to know that this money is being well spent with an announcement that they are buying a school in Natal.


I played around that it was Michaelhouse and that they will be turning it into a co-ed school. Sasha then asked if they will be allowing boys to attend. Ha-ha, we are being very rude, apologies in advance. It is however not Michaelhouse, but rather a school near Richards bay called Grantleigh which has a primary and high school compromising 700 learners. It seems as they just cannot build schools fast enough and acquiring is the fastest way to add learners. It also seems as though they have lots of potential acquisition targets.


Funnily enough we had this conversation in the office on Friday. Sasha very proudly showed us one of his daughters report cards (she nailed it) and the conversation turned to education. It seems that the demand to send ones child to a well known private school is so intensely high that you basically have to apply at birth. And the fees are huge. This is for non profit private schools and obviously does not fall under the Curro umbrella.

But surely this means there is a huge gap in the market. Most people cannot afford these fees but most people prioritise their child's education. If Curro can offer that service, which they are, then the possibilities are endless. And they are first movers in a market where millions of people are desperate for an affordable quality education. You can also feel good about it at the same time.


This is not to say there are no risks involved. The model requires massive capital expenditure and I would not be surprised if they tried to raise money from shareholders again. Especially at this elevated level. But that is because I believe there are still lots of acquisition targets out there which they can use to expand on and increase learners.


Here is what CEO DR Chris van der Merwe had to say about the acquisition and the company's goals. "Curro is without doubt on its way to achieve its goal of 80 schools by 2020. Grantleigh is Curro's sixth major acquisition in the private schools market, including EITE. In January this year Curro's portfolio consisted of 25 schools. With the construction of 5 new schools this year and taking EITE and Grantleigh into account, the total of Curro schools in operation as from January 2014 will be 32. Curro has opened its doors with 20 800 learners this year and current indications are that this number has grown to 26 000."


Were they to raise more money in the future I would happily entrust them with more of my funds.