A FUND worth R1,2bn established last year by Old Mutual Investment Group SA (Omigsa), Old Mutual Life Company and the Public Investment Corporation (PIC) yesterday signed a deal with JSE-listed private schools company Curro Holdings to build and acquire privately-owned schools for children from low-income families across the country.
The venture marks a new thrust by the PIC - which manages more than R1-trillion on behalf of the state - to invest in the private schools education market where demand is rising due to concern about the quality of government education.
Curro, which last week raised R477m from a rights issue to fund its expansion, would contribute nearly R43m and the Schools and Education Investment Impact Fund of SA (Schools Fund) a loan of just over R397m.
The partners would provide funding to a company that will operate the Meridian Independent Schools brand of schools, expanding them from the existing three to 11 with 20000 pupils over the next seven years.
Curro would manage the schools which were aimed at families with an annual income of R200000 and would charge monthly fees of between R900 and R1300.
Demand for private schooling is expected to increase as more middle-income black families enter the market, said labour economist Loane Sharp. He said last week the growth of private schooling would be similar to that in the private security sector, which now employed more guards than the police force.
Current estimates show there are about 30000 government schools enrolling more than 11,5-million students and more than 470000 students enrolled at between 1100 registered and about 2000 unregistered privately-owned schools.
Curro CEO Chris van der Merwe said negotiations to partner with Omigsa started a year ago. "We have partnered with Curro because of their track record in delivering high-quality education," Christine Glover, head of development impact funds at Omigsa Alternative Investments, said yesterday.
The Schools Fund, which has so far invested more than R500m in education projects, was established after the PIC approached Omigsa to help find innovative ways of addressing the shortage of affordable schools in SA.
The PIC has so far contributed R1bn to the fund and Omigsa R200m. "We are very excited about our involvement with the Curro independent schools project," said Elias Masilela, the CEO of the PIC. "This investment is in line with our investment approach. As a long-term investor, we believe that over time this will yield the desired results of providing quality education to South Africans," he said.
Dr Van der Merwe said Curro was building a Meridian school in the Western Cape and was considering projects near Cosmo City in northern Johannesburg, Durban and Nelspruit.
He said at least three Meridian schools would be built every year in these areas excluding possible acquisitions of existing schools.
Curro, which also manages schools targeted at the high-end market, would build its own teacher training college within the next 24 months.