South African private school battle

ADvTECH and Curro are fighting for market share in the South African private school sector, and both offer good investment cases.

ADvTECH is a JSE-listed company that operates in the education and recruitment industries in South Africa and the rest of Africa.

The company’s roots date back to 1909 when the first establishment that ADvTECH would absorb was launched.

Brian Buckham founded Advanced Systems Incorporated in 1978, which would later be called ADvTECH.

ADvTECH was listed on the JSE in 1987. In the following decade, it launched Varsity College and Crawford Schools and bought Rosebank College.

Today, ADvTECH is South Africa’s leading private education provider and a continental leader in education, training, skills development, and placement.

Its biggest competitor, Curro, was established in 1998 when Chris van der Merwe opened a small independent school with 28 learners in a church in Durbanville.

They quickly became known for focussing on learners’ needs and accommodating their personal lives in the school environment.

Van der Merwe later built the first physical Curro school himself with ten bricklayers and thirty labourers. It was the start of a rapid growth curve.

Curro grew rapidly in the following years as more investors joined. By 2010, it had five campuses and about 3,000 enrolled learners.

Just one year later, the group had 12 campuses with 5,500 learners and was listed on the JSE’s Alternative Exchange.

This growth continued from year to year. Today, Curro has 178 schools across 82 campuses, with about 70,400 learners, including schools in Botswana and Namibia.

Curro Holdings manages the schools that provide education for learners from three months to Grade 12.

Curro’s vision is to make independent school education accessible to more learners across southern Africa.

ADvTECH and Curro

ADvTECH and Curro have shown good growth in recent years and continue to capitalise on South Africa’s poor government education system.

Curro generated R4.8 billion in revenue in its most recent full year, growing at an average annual rate of 14% since 2018.

ADvTech’s school revenue increased by an average annual rate of 10% to R3.2 billion since 2018, significantly slower than Curro’s.

This caused Curro to pull ahead its revenue gap from around a R400 million differential in 2018 to just under R1.6 billion in 2023.

As of December 2023, Curro had 73,159 learners, whereas ADvTech had 41,010 learners across all its schools.

Curro generated an average revenue per learner of R65,118 in 2023 and an average operating profit per learner of R11,578.

ADvTech generated an average revenue per learner of R77,800 in 2023 and an average operating profit per learner of R16,669.

Even though Curro has grown its revenue more strongly, it is not as profitable as ADvTech’s school segment.

Since 2018, ADvTech has achieved an average operating profit margin of 18.2%, while Curro produced an average operating profit margin of 16.4%.

For the 2023 financial year, ADvTech’s school segment delivered an operating profit margin of 21%, with Curro delivering 18%.

In 2018, Curro generated a higher operating profit margin than ADvTech. However, its profitability has experienced a downward trend.

ADvTech, on the other hand, delivered an improving profitability trend within its school segment, increasing its operating profit margin from 18% to 21%.