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Cape Town - PSG-controlled investment specialist Paladin Capital [JSE:PLD] believes it can chalk up above-average returns from its investment in a fledgling private education company.
Paladin recently spent R52m to bump up its stake in Cape-based private education company Curro Holdings to 75%.
Writing in Paladin's annual report, chairperson Jannie Mouton said: "Without downplaying the other segments, education is an industry in which Paladin believes above-average potential exists. This is where management sees significant growth in the foreseeable future."
He argued that education was one of the most basic needs of society. "It falls just below food and shelter in terms of importance."
Founded by current CEO Chris van der Merwe in 1998, Curro operates five schools with over 3 000 pupils.
Mouton said Curro, which intended expanding aggressively, offered fees of up to 40% lower than those of its competitors. "Curro aims to be a high-quality, value-for-money alternative."
Mouton believed demand for Curro's services would continue as very few schools were being built in middle- and upper-income areas, and waiting lists at private schools were long.
He pointed out that only about 3% of pupils attend private schools, compared to 22% of the population who received private healthcare.
Curro currently has five schools in operation - Durbanville, Langebaan, Hazeldean, Roodeplaat and Curro Liberty College in Witbank.
Developments are under way at Hermanus, Mossel Bay and Krugersdorp, as well as a high school at Hazeldean.
Paladin's annual report valued the 50% stake in Curro - before the additional 25% stake was acquired - at R100m. This represented 9% of Paladin's total portfolio of R1.167bn.
By comparison Advtech, the only private education company listed on the JSE and the owner of brands like Crawford Colleges and Abbotts, holds a market capitalisation of R2.4bn.
Paladin's annual report also disclosed that Curro operated a loss of R300 000 in 2007, shifted into an after-tax profit of R300 000 in 2008 and generated R1.9m in after-tax profits in 2009.
Mouton said profits would remain subdued while Curro was in a growth phase "due to the amount of leverage used".
He said Paladin had assisted Curro in raising a ten-year loan facility of R73m with the International Finance Corporation, a division of the World Bank.
"This, in conjunction with Paladin's backing, enables Curro to aggressively expand its current network of schools."
- Fin24.com
Paladin recently spent R52m to bump up its stake in Cape-based private education company Curro Holdings to 75%.
Writing in Paladin's annual report, chairperson Jannie Mouton said: "Without downplaying the other segments, education is an industry in which Paladin believes above-average potential exists. This is where management sees significant growth in the foreseeable future."
He argued that education was one of the most basic needs of society. "It falls just below food and shelter in terms of importance."
Founded by current CEO Chris van der Merwe in 1998, Curro operates five schools with over 3 000 pupils.
Mouton said Curro, which intended expanding aggressively, offered fees of up to 40% lower than those of its competitors. "Curro aims to be a high-quality, value-for-money alternative."
Mouton believed demand for Curro's services would continue as very few schools were being built in middle- and upper-income areas, and waiting lists at private schools were long.
He pointed out that only about 3% of pupils attend private schools, compared to 22% of the population who received private healthcare.
Curro currently has five schools in operation - Durbanville, Langebaan, Hazeldean, Roodeplaat and Curro Liberty College in Witbank.
Developments are under way at Hermanus, Mossel Bay and Krugersdorp, as well as a high school at Hazeldean.
Paladin's annual report valued the 50% stake in Curro - before the additional 25% stake was acquired - at R100m. This represented 9% of Paladin's total portfolio of R1.167bn.
By comparison Advtech, the only private education company listed on the JSE and the owner of brands like Crawford Colleges and Abbotts, holds a market capitalisation of R2.4bn.
Paladin's annual report also disclosed that Curro operated a loss of R300 000 in 2007, shifted into an after-tax profit of R300 000 in 2008 and generated R1.9m in after-tax profits in 2009.
Mouton said profits would remain subdued while Curro was in a growth phase "due to the amount of leverage used".
He said Paladin had assisted Curro in raising a ten-year loan facility of R73m with the International Finance Corporation, a division of the World Bank.
"This, in conjunction with Paladin's backing, enables Curro to aggressively expand its current network of schools."
- Fin24.com
