The Jannie Mouton Foundation says a potential conversion of Curro to a nonprofit entity will free Curro from a profit mindset and allow it to build schools in areas where it will never make financial sense.
Despite reporting stagnant half-year results, Curro’s shares surged more than 50% after the Jannie Mouton Foundation launched a R7.2b bid to buy out the private school group, delist it and convert it into a nonprofit organisation.
The foundation is a trust registered as a public benefit organisation founded by Johannes Mouton, a founder of Capitec, PSG Group and PSG Financial Services.
The buyout would offer investors a major upside, with a R13 per scheme share offer price, representing a 60% premium to Curro’s pre-announcement closing price of R8.13c, and still above the current trading price of around R12 after the rapid share price growth.
Commenting on the proposed buyout, Curro CEO Cobus Loubser said the offer “appears to be an attractive one for shareholders” and noted that it is being made by “a party who is not a competitor of ours,” describing the proposal as “a way to create permanent value for shareholders”.
Loubser explained the overlap in values between Curro and the foundation: “they have a deep passion for education and so do we”.
Jan Mouton, deputy chair of the foundation and son of Johannes Mouton, said education had always been a core passion for the foundation, guided by the principle of empowering people to contribute to a better South Africa.
According to Mouton, the foundation’s experience in supporting social initiatives inspired the idea of acquiring Curro, enabling it to scale impact through an already profitable network. “If we base R7.2bn for the 189 schools, it’s R38m per school, and then we have a functioning entity that is profitable,” he said.
Despite potential upsides for shareholders and learners alike, Curro’s interim results tell a story of growth throttled by broader economic challenges in South Africa. Specifically in the education sector, where Curro said, “economic pressures are impacting family budgets”.
Curro's weighted average learner numbers for the first six months of the year decreased by 1.4% to 71,749 learners, while earnings per share fell 36% to 25.7c, impacted in part by a R74m impairment on vacant land held for future development.
Earnings before interest, taxes, depreciation and amortisation held steady at R625m, unchanged from the prior comparable period, while headline and recurring headline earnings per share remained relatively stable at 40.3c (both up 0.2%), but represent a marked slowdown compared to the 16.2% growth in both recorded in the first half of 2024.
Loubser said “conditions have been challenging in South Africa and consumers have been under pressure”, but explained that the company was not alarmed by the results.
“We started this year with about a 1,000 learners fewer than last year [but] given the long cycle of this operation and the incredible foundations we've established for the future, we believe it's a temporary thing, not an operational thing.”
Loubser said that the company's priority was delivering quality private education and it is balancing educational excellence with financial sustainability and resilience, despite a challenging operating environment.
Despite the weaker earnings performance, Curro delivered several positives in the period. The company repurchased a total of 33-million shares for R327m, of which 10.8-million shares valued at R116m were repurchased and cancelled during the first half of the year, reducing the number of shares in issue.
Additionally, the company refinanced R2b of existing debt facilities with R2.4b on more favourable terms, bringing total net debt down to R2.998b from R3.154b at the end of 2024. Revenue also increased 4.7% to R2.7b, driven by annual school fee adjustments.
On what the potential buyout would mean for Curro, Mouton said that the company would become a public benefit organisation, meaning that “all its profit will be spent on furthering its goal of education, which will mean many more bursaries for underprivileged children to attend Curro schools and achieve a quality education.”
Mouton said that a potential conversion to a nonprofit entity would free Curro from a “profit mindset” and allow it to “build schools in areas where it would never make financial sense” and open more opportunities to the public.
“After conversion to a nonprofit company, there'll be no shareholders of Curro, and Curro will be then managed by its current board, and the foundation will also put some board members on the Curro board,” Mouton said.
Loubser said a potential transition could prove to be relatively seamless and that the buyout “could be about introducing new facilities and new venues or enhancing existing facilities [but that] parents, learners or staff must not feel that this process could prejudice them at all”.
Mouton explained that if the bid is accepted, the foundation will ensure that decisions will be made with the best interests of the learners in mind, “to give children better education”.
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