In just over two years, private education play Curro Holdings has delivered a four-fold return for shareholders. The shares were easy to accumulate around R6 shortly after its 2 June 2011 AltX listing. In the past month they have added more than that, surging from R19.50 to the current R27.50 since mid November. Sceptics abound. Then again, this isn’t the first time the extraordinary entrepreneur Jannie Mouton is defying convention. His first home run came through a R50m OTC investment in JSE Limited which was sold for R679m. PSG’s R250m seed capital into Capitec is now worth R6.6bn. There is clearly more of the Mouton Magic at work at what five years ago was a three-school business called Curro. An initial investment of R50m in July 2009 gave the group a half share in the company. That was followed a year later with another 26% for R52m. After Curro’s 2011 listing, internal re-organisation and the injection by PSG of a further R610m via rights issues, the Mouton group’s interest is 57.5% after a total investment of R833m. PSG’s Bernardt vd Linde was seconded to become Curro’s financial director while Jannie’s son Piet serves on the Curro Exco. At the current share price PSG’s stake is worth R4.66bn – five and a half times its investment. Judging by the confidence expressed in this interview by CEO Chris vd Merwe, there’s lots more to come. – AH
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ALEC HOGG:  We go onto somebody else who has really had a rip-roaring ride recently. Founded in 1998, Curro is a developer, manager, and owner of private schools throughout South Africa. It has grown into a market leader in the provision of affordable, quality private school education or, at least, that’s what it tells us. The company’s Chief Executive Chris van der Merwe joins us on the line. It’s nice to talk with you as a new entrant now into the Alsi Index, Chris. Curro didn’t quite make it into the top 40. I see you’re on free float number 111 on the JSE, but you are in the All Share Index now for the first time: eight billion rand market Cap Company, so it’s another step in the right direction.
CHRIS V D MERWE: Yes Alec, good afternoon and it’s also great to speak with you again. We’re very proud of what we’ve achieved over the past years since listing Alec, I think one of the main reasons why we experienced success is because our business model is a rather simple one, and I think it’s sticking to one’s knitting.
ALEC HOGG:  We have seen Capitec, and we were mentioning it just a moment ago – I suppose from the same stable with the PSG funding, as with you – also question marks about Capitec in the early days whether share price rise was sustainable. Are you able to tell shareholders or give them any support as to why they should hang in there?
CHRIS V D MERWE: Alec, I am in a closed period but the one thing that we’ve seen in terms of historic patterns, is that our constant growth rate in terms of learner numbers was more than 20 percent since listing. If you look at our vision for 2020, namely that we want to be 80 schools, we can confirm everything is going according to plan. We have more than enough opportunities, once again, for next year. We started this year with 26 schools. We’re now already 36 for 2014, so the best advice/input I can give is everything is going according to the plan, to reach those 80, then2020 vision.
GUGULETHU MFUPHI: Chris, regarding your operations, give us more details on the recent acquisition that you’ve done by expanding your presence in KZN with Grantleigh.
CHRIS V D MERWE:  Over the years we’d concluded that obviously, we want to be in all the provinces, but the three provinces that are very attractive for our kind of model is Gauteng, followed by KwaZulu Natal, followed by the Western Cape. Regarding that recent acquisition, it was a school situated on anything between 12 and 15 hectares…currently, 700 learners that we acquired and the reason being that the ethos of that school is purely aligned with that of Curro. We also feel that we can turn that specific school, situated on that wonderful earth, into a jewel of northern Natal.
ALEC HOGG:  Empangeni, Richard’s Bay…an area where there is plenty of money as well…Chris, just on a competitive basis, you’ve really had a good run over the last few years. In fact, over the last three years, your share price is up by five times, but the big competitor ADvTECH, is changing its Chief Executive and bringing in new management. Do you think they’re going to be more of a threat?
CHRIS V D MERWE: Alec, we really feel that there’s definitely a place for more than only one or two role players in this sector. Let’s call it the private school sector. Over the last two years, ADvTECH definitely expanded their vision by also starting to invest in schools that are a bit more affordable. I therefore believe that for every venture that wants to enter into this trade, one has to focus in on that segment that can afford your product, so I think they’ll definitely expand in the future.
ALEC HOGG:  So there’s no problem. As far as you’re concerned, the market is big enough for two of you and maybe more.
CHRIS V D MERWE: More than big enough, Alec. Maybe I can tell you this: There are 12 million children in schools in South Africa as we’re speaking now, and of the 12 million children, two million of them find themselves in the LSM9-10 group. If you look at the Curro model where we only want to, as a first step, reach about 100,000 of the two million, I firmly believe that the marketplace is big enough for all of us.
ALEC HOGG:  That was Curro’s Chief Executive Chris van der Merwe.
