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Milpark Education deal beefs up Stadio portfolio

Business Live / 16 OCTOBER 2017 - 06:02 / HANNA ZIADY

In its largest deal yet, and its first since listing, Stadio Holdings, the tertiary-education unit spun out of private-school group Curro, will acquire Milpark Education for R320m from international education group Apollo Global.

"The reasoning behind the acquisition of Milpark was to get hold of a faculty of commerce because [Milpark has] a series of lovely business-inclined qualifications," Stadio CEO Chris van der Merwe said on Friday.

Picture: THINKSTOCK

The acquisition would use half of the R640m that Stadio was likely to raise in a rights issue now under way, Van der Merwe said. The remainder would be used for further acquisitions and to pay off debt owed to Curro for the Embury Institute for Higher Education.

In terms of the deal, Stadio and its black economic empowerment partner, Brimstone, will acquire interests of 70% and 30%, respectively, in a new private company, Milpark Investments. Milpark Investments will acquire 100% of MBS Education, which owns Milpark.

"Our broad strategy is to accumulate product by buying several brands and once we have enough brands, we will then develop our first greenfield [operation], which we refer to as a multiversity, where one can actually have several brands on several sites close to each other," Van der Merwe said.

Stadio, which listed on the JSE on October 3, owns Embury, film and performance school Afda and Southern Business School.

The acquisition takes its student numbers from 13,000 to about 30,000, making it about the same size as Stellenbosch University or the University of Cape Town.

"We are heading for interesting times in terms of growth in Stadio," said Van der Merwe.

There is massive demand in SA for affordable higher education, which public universities have struggled to meet.

The National Development Plan targets an enrolment of 1.62-million students in higher education by 2030.

There were now about 1-million students in public universities and another 150,000 in other tertiary institutions, said Van der Merwe.

"There’s a [large] opportunity to grow in Stadio; especially if you make products affordable."

Even in the tough economic environment, families would reprioritise their budgets to ensure they could buy an educational product, he said.

The Milpark deal was a "classic PSG acquisition policy", where a new listing raises rights-issue money and "immediately afterwards spends it on a slew of acquisitions", said Vunani Securities analyst Anthony Clark.

"Milpark I expect to be the first of a series of transactions to give Stadio critical mass and scale on the tertiary side."

Existing operators already offered most of the accreditation courses Stadio intended to offer, Clark said. "There are probably only 10-12 transactions in the tertiary space that perhaps would be of interest to Stadio."

ziadyh@businesslive.co.za

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LINK - https://www.businesslive.co.za/bd/companies/2017-10-16-milpark-education-deal-beefs-up-stadio-portfolio/

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