There was a time, perhaps about 10 to 12 years ago, when private education represented the best-performing earning curve on the JSE.
At its peak Curro, which became the poster child for private schooling, traded on an earnings multiple in the hundreds as the fast-expanding business promised to move profits along an enticing J-curve trajectory.
Today Curro no longer represents a star pupil business and is in the throes of being bought out. Presumably the hard decisions that will ensure a satisfactory (rather than spectacular) sustainable profit path might be best executed away from public scrutiny.
Trematon Capital Investments, the small company that owns the niche Generations private school brand, seems to face a quandary similar to that of Curro. Its school division — a fraction of Curro’s network — saw a hefty writedown in value from R293m at the end of August last year to R201m this year. Revenue edged down 1.3% to R206m, while profits fell from R31m to R25m on dwindling student numbers. Trematon spoke of a nationwide trend of declining enrolments for preprimary education, with financial constraints forcing families to delay the entry into formal schooling.
These downbeat remarks will probably make Curro shareholders grateful for the buyout offer on the table from the Jannie Mouton Foundation. Proceeds could conceivably be mobilised into a private university business such as Stadio Holdings, where enrolment restraint is not apparent.
Curro shareholders, however, were told recently that the proposed buyout still awaits Competition Tribunal approval. Surely there can’t be a compelling competition issue or pressing public interest matter snagging what has been heralded as the biggest charitable transaction in South African history? If there is, the inevitable delay to the deal could be quite dastardly.
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