INVESTING IN EDUCATION - ARE INDEPENDENT SCHOOLS THE ANSWER?
By Victor Mupunga, research analyst at Old Mutual Wealth Private Client Securities.
Inadequate funding towards education is not the key challenge facing South Africa’s struggling public education system, but rather the inefficient allocation of public funding.
Independent schools may just hold the answers – coupled with sound investment opportunities – to not only meeting increasing demand, but also to offering efficiently managed alternatives.
Globally, governments allocate roughly 16% of annual revenue to education compared to South Africa’s 20%. This points to a skewed cost structure rather than the actual amount spent on education, as many critics assume. A recent paper by the International Monetary Fund echoed these findings, highlighting staff compensation as one reason for the South African government’s dismal delivery on its education investment.
These and other ongoing issues with the South African public education system have strengthened the case, and opportunities, for independent schools in the country. These schools are offering quality education for children and, on average, are also managed more efficiently than their public counterparts. Coupled with the low penetration of independent schools in SA compared to other countries, the introduction and funding of more independent schools in the country may be one way to meet the education challenge.
Latest data points showed that the market share of independent schools in developing markets was around 14%, which is in stark contrast to SA’s 4%. This disparity between SA and other developing markets is even larger in secondary education. There is a void to be filled.
Private education companies address the critical education issue in South Africa, which is an important investment consideration, given growing investor awareness of environmental social and governance (ESG) considerations in the investment process. Investors globally are growing more conscious of the need to combine generating returns with doing greater social good. Therefore the social virtue of supporting the operation of a business that educates learners cannot be overstated.
EDUCATION AS INVESTMENT
One such investment opportunity my team and I have identified is that of ADvTECH, a leading provider of private education, training and staff placement services in Africa. Its offering includes primary, secondary, tertiary schooling, as well as a job placement business. This means that the company can be involved in a child’s education from their first day at nursery school and all the way throughout their working career.
From an investment perspective, we typically like businesses with some diversification and ADvTECH has a differentiated offering from a stage of life perspective. The company also meets this criteria by owning multiple differentiated brands, including the well-known Abbotts College, Varsity College, Rosebank College, Trinity House and Crawford schools.
The business model is simple but effective. Once a school is built in a good location and the cost structure is right, it becomes a case of bums on seats. The operational leverage is high, and after a school breaks even additional enrolments fall through to the profit line. The model is also highly cash generative. Fees are paid at the start of the month, quarter or year, and bad debts tend to be very low. Moreover, learners tend to be at a school for many years resulting in an annuity revenue stream with an expectation of some escalation every year, which all makes for a good business model.
The company’s foray into the education sector dates back to the mid-90s and I believe that this is why the business has such a good understanding of the sector. One cannot underestimate the expertise required to operate across Africa in such an important sector. ADvTECH proves that it has the expertise time and again when picking new school sites, building new schools on time and within budget but also when identifying acquisition targets.
ADvTECH has always been known for its high-end independent schools but has increased its focus on the mid-fee market segment as the tough economic environment has seen South African families move abroad and competitors offer independent schools at fees comparable to model-C schools.
The company recently completed a significant investment drive, acquiring close to 50 schools in four years, essentially doubling the size of their schools division. With these investments done and an expected improvement on the economic front, we expect improved shareholder returns. Furthermore, the group has a growing number of schools in the mid-fee sector under the brand name Pinnacle Colleges, which has been reporting strong growth. This hedges the group to some extent against the current difficult economic environment.
Given economic growth rates across the African continent and the challenge to educate the growing African population, investing in education that spans across the continent is becoming vital. Investments into the rest of Africa has also served to diversify the company’s assets. They have invested in the likes of Zambia (university) and Kenya (Crawford school in Nairobi/Makini brand of schools), and over time we expect increased contribution to profitability from rest of Africa.
ADvTECH Updates
ADvTECH Limited (Incorporated in the Republic of South Africa) (Registration number 1990/001119/06) Share code: ADH ISIN: ZAE000031035 (“ADvTECH” or “the Company”) DEALINGS IN SECURITIES BY A PRESCRIBED OFFICER OF THE COMPANY In compliance with the JSE Limited Listings Requirements the following information is disclosed in respect of dealings in ADvTECH securities by an ADvTECH Prescribed Officer.
ADvTECH Limited (Incorporated in the Republic of South Africa) (Registration number 1990/001119/06) Share code: ADH ISIN: ZAE000031035 (“ADvTECH” or “the Company”) DEALINGS IN SECURITIES BY A PRESCRIBED OFFICER OF THE COMPANY In compliance with the JSE Limited Listings Requirements the following information is disclosed in respect of dealings in ADvTECH securities by a Prescribed Officer.
The Annual Resolute Roboticon took place on Saturday, 13 September, at the Heartfelt Arena in Pretoria North, attracting over 3,000 entries from schools across South Africa. Only 360 students were selected to compete, making participation an achievement. The Community Schools Group proudly fielded 12 teams across five competitive categories, representing the Pinnacle Colleges brand: Pinnacle College Waterfall (3 teams) Pinnacle College Rynfield (4 teams) Pinnacle College Linden (1 team) Pinnacle College Kyalami (1 team) Tyger Valley College (3 teams) Our students achieved outstanding results: · Pinnacle College Linden – 1st place in the Advanced Category · Tyger Valley College – 2nd place in both Advanced and Apprentice 3 categories · Tyger Valley College – 3rd place in the Entrepreneurship Category “These achievements underscore the growing impact of Robotics and Coding within the Pinnacle Colleges brand. By immersing students in real-world problem-solving, opportunities such as Roboticon empower learners to thrive in an exceptional and future-focused technology space,” said Altie van Schalkwyk, Academic Head of Brand – Community Schools Group. Initiatives like Roboticon reflect how Pinnacle Colleges are promoting a culture of innovation, preparing students to lead confidently in a technology-driven world.
Children are naturally curious. Whether it’s watching a bug crawl across the floor, splashing in a puddle, or asking “why” countless times in an hour, their world is filled with questions. This curiosity is more than just a phase. It is the foundation of learning and confidence, and should form the starting point for learning at home and at school. Zaakirah Mahomed, Academic Advisor: Foundation Phase at ADvTECH, Africa’s largest private education provider, says Inquiry-Based Learning (IBL) is an approach that harnesses children’s innate sense of wonder. “It transforms everyday questions into meaningful discoveries, sparking a lifelong love for learning. For this reason, it is important that when choosing your child’s first school, you ensure the school’s approach is based on harnessing inquiry-based learning, not just handing down of facts. The latter carries a risk that learning is viewed as work from a young age, which can negatively influence attitudes to learning throughout the child’s life.” In a classroom rooted in inquiry, children are not simply passive recipients of facts. Instead, they are encouraged to wonder, explore, and investigate. “Rather than memorising information, learners might explore why leaves change colour, how magnets work, or what creates a rainbow. Guided by their teachers, they investigate these ideas through hands-on activities, experiments, and creative projects. The learning feels like play, but the impact is powerful,” Mahomed says. Research underscores the effectiveness of Inquiry-Based Learning in fostering deeper understanding and retention. A meta-analysis of 54 studies published in American Psychological Association’s Journal of Educational Psychology found that students engaged in IBL demonstrated significantly higher levels of conceptual understanding in science compared to those taught through traditional methods. By actively exploring questions and constructing knowledge through guided investigations, children develop a stronger grasp of complex concepts, as they connect new information to their own experiences and curiosity. This approach not only enhances academic performance but also cultivates a mindset of inquiry that prepares students for lifelong learning, the analysis found. The importance of IBL is further highlighted by its alignment with 21st-century skills. According to a 2020 report by the World Economic Forum, critical thinking, problem-solving, and creativity are among the top skills needed in the modern workforce. IBL directly supports the development of these competencies by encouraging children to ask questions, analyse evidence, and collaborate on solutions. “By engaging in inquiry-driven tasks, such as designing experiments or debating hypotheses, students build the intellectual flexibility and resilience needed to navigate an increasingly complex world,” Mahomed notes. IMMEDIATE BENEFITS FOR YOUR CHILD Inquiry-Based Learning isn’t just about preparing children for the future, however. “IBL fosters engagement, curiosity, and confidence from the very start. Children are encouraged to experiment, make mistakes, and try again. Helping them to see that errors are simply stepping-stones to discovery,” says Mahomed. “When learners test how water flows through a funnel or why a toy rolls differently on tile compared to carpet, they are building critical thinking skills. These problem-solving abilities help them not only with schoolwork, but also in everyday life.” IBL also nurtures collaboration and communication. As children work in small groups or pairs, they learn to share ideas, listen to others, and work as a team. “Even the quietest child can find their voice when their question leads to an exciting experiment or project,” she notes. CHOOSING THE RIGHT SCHOOL When selecting a school, parents should look for one that prioritises inquiry as part of its teaching and learning approach. Such schools encourage curiosity-driven lessons, creativity, and real-world problem-solving. “Outstanding foundation phase schools place a strong emphasis on Inquiry-Based Learning and student agency. They proceed from the belief that children should have a voice and choice in their learning, because by taking ownership of their questions and discoveries, children build independence and confidence,” Mahomed says. “Parents can be assured that this approach does more than prepare children academically. It equips them with the resilience, adaptability, and problem-solving skills they need to thrive in a fast-changing world.”
Crawford International Pretoria was buzzing with excitement on Tuesday, 9 September, when one of South Africa’s premier radio breakfast shows, 947’s Anele and the Club, broadcast live from our sports field. The day kicked off bright and early at 06:00 with games, quizzes, and prizes that had everyone involved. From Grade 0000 to Grade 12, our students embraced the challenge—taking part in games of chance, mental agility, and physical skill. The atmosphere was vibrant, colourful, and filled with energy, bringing the entire Crawford International Pretoria community together. A special highlight of the morning was a surprise performance by renowned South African singer, songwriter, and record producer Jeremy Loops, joined on stage by Sibongiseni of the legendary Ladysmith Black Mambazo. Their live performance was nothing short of unforgettable. And to top it all off—we won R50 000 for our school! It was a day to remember, showcasing our unique spirit, talent, and stories to the whole of Gauteng. We truly showed what it means to be #ProudlyCrawfordian.
JSE-listed ADvTECH has announced the launch of Emeris, a groundbreaking new private higher education brand that will bring the Varsity College, Vega School, and MSA brands together under a single name. One aspect of the change is the building of a state-of-the-art R420m mega campus in Sandton, Johannesburg. This development will bring the existing Varsity College Sandton and Vega Bordeaux operations together on the same site. It will open its doors in 2026 with an initial capacity of 9,000 students. Facilities will include a double-storey library and information centre, a student experience hub with career and counselling services, a custom-designed indoor sports centre capable of hosting international events and innovation spaces including IT labs, podcast studios and interactive mock classrooms.
Varsity College, Vega, and MSA unite under a bold new brand The Independent Institute of Education (IIE) has announced the launch of Emeris, a groundbreaking new private higher education brand that will bring the Varsity College, Vega School, and MSA brands together under a single name. The new entity will officially launch in 2026. The consolidation under the new name comes as South Africa prepares for legislative reforms that will, for the first time, allow private institutions that meet defined criteria to be recognised as universities.
The ADvTECH Group (ADvTECH), Africa’s leading private education provider, today officially opened Rosebank International University College (RIUC) in Accra, Ghana, marking the group’s first university opening outside South Africa. Student registrations opened on 15 August, with the inaugural academic semester set to begin in January 2026. Strategically located in Accra’s prestigious Airport Residential Area, the RIUC campus offers accredited qualifications from diplomas to doctoral degrees in high-demand fields including Business Administration, Digital Marketing, IT, Service Management, and Hospitality. “We are delighted to bring our highly successful Rosebank College brand to Ghana and expand our university footprint outside of South Africa for the first time,” said ADvTECH Group CEO Geoff Whyte.
Click on the image below to read full SENS Announcement
Commenting on the six months ended 30 th June 2025, ADvTECH CEO, Geoff Whyte said: “Healthy enrolment growth, moderate fee increases, improved debtors control and continued margin improvement contributed to ADvTECH delivering another strong set of results.” “In the six months under review, we continued to build competitive advantage by investing in superior technology to enhance teaching and learning, further cementing our position as the leading provider of private education on the African continent.” Group: Operational and Financial Performance Revenue up 10% to R4 683 million (2024: R4 274 million) Operating profit up 14% to R982 million (2024: R865 million) Operating margin improved to 21.0% (2024: 20.2%) Normalised earnings per share increased by 16% to 113.0 cents (2024: 97.7 cents) Group revenue grew by 10% to R4 683 million for the six months ended 30 th June 2025 (2024: R4 274 million), driven by a 13% increase in the education division. Group operating profit increased by 14% to R982 million (2024: R865 million), with the education division’s operating profit increasing by 15%, supported by strong enrolment growth. Group operating margin improved to 21.0% (2024: 20.2%). Operating margin in the education divisions improved to 23.8% (2024: 23.5%) through the benefit of operating leverage and a continued focus on efficiencies. This more than offset the additional costs incurred to strengthen our brands through the introduction of additional global benchmarking measures, artificial intelligence tools to support personalised learning and enhanced student information systems. Normalised earnings for the period increased by 16% to R620 million (2024: R535 million) while normalised earnings per share increased by 16% to 113.0 cents (2024: 97.7 cents) per share. A continued focus on collection processes has seen gross trade receivables increasing by only 3% compared to a revenue increase of 10%. Loss allowances decreased to R488 million (2024: R494 million) , due to improved collections and favourable aging of the debtors’ book. Cash generated by operating activities increased by 18% to R2 303 million (2024: R1 959 million). Capital expenditure of R327 million was focused mainly on increasing capacity at existing sites to meet incremental demand. Dividend Announcement The board is pleased to declare an interim dividend of 45.0 cents (2024: 38.0 cents) per ordinary share in respect of the six months ended 30 th June 2025. Divisions: Operational and Financial Performance Schools South Africa Robust enrolment growth driving strong financial performance Revenue increased by 11% to R1 722 million (2024: R1 556 million) with all brands showing enrolment growth. Operating profit increased by 12% to R354 million (2024: R316 million) with operating margin improving to 20.6% (2024: 20.3%), benefiting from scale leverage. Strong enrolment growth at Pinnacle College Raslouw has necessitated the accelerated build out of the school. Pinnacle College Ridgeview opened in Roodeport in January and is performing in line with expectations.
