Curro Holdings, the JSE-listed education company, the PIC, South Africa’s biggest sovereign wealth fund and Old Mutual, the life assurer, have acquired a Polokwane-based Northern Academy Independent Secondary School for 150 million rand ($17 million).
This is among the first deals of its nature in South Africa as the country’s private sector has had a minimal contribution to the education of the country.
This deal will prompt a movement of listed companies acquiring companies that perform well but do not have great resources to educate the children.
Northern Academy was established in 1996 and has grown to the point that it has 3,900 learners, of which 2 200 live in the boarding facilities.
The school has consistently achieved a 100 percent matric pass rate, with 77 percent of pupils receiving a matric exemption. Roughly 80 percent of pupils take maths, science and accounting for matric.
The school is profitable and will push Curro from a loss making position to a profit position at year end.
Aside from the positive financial effect of the deal, this acquisition brings with it considerable intellectual property specifically in the community-schools market which is a focus area for the further expansion.
This is the second time in a week that Old Mutual Emerging Markets has made an acquisition.
Late last week, Old Mutual acquired a majority stake in AIVA, the Latin American distribution business, for an undisclosed sum.
It is believed this acquisition will strengthen Old Mutual’s distribution capability in emerging markets.
Old Mutual’s move shows that the company is steadfast in its resolve to focus only on emerging markets. It unveiled this strategy after its fingers were badly burnt in US when its life business lost billions in failed hedges.
In 2010, it sold its US life business to hedge fund Harbinger Capital for $350 million (£219 million) in a deal that helped the company pay down debt as it jettisoned businesses that hurt its financial position during the financial crisis.
The sale cut Old Mutual’s capital position by about £100m but reduced significantly its exposure to credit risk by shedding a business that was carrying mark-to-market losses of more than $2 billion at the depths of the crisis.