Why This Investment Fund Just Invested Nearly R200 million In Building Schools

Updated on 2 June 2017

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Why This Investment Fund Just Invested Nearly R200 million In Building Schools

South Africa’s first education impact fund, Schools Investment Fund‌, in May this year announced that it had approved two major investments.

In Gauteng R108.5 million has been approved for the development of three new schools in the Gauteng region, a partnership between Schools Investment Fund and the Blue Hills Management Company. The investment will provide access to high quality, affordable education for 2 100 learners.

And in Durban, the fund has announced a joint venture with Nhlanhla Khambule and his company Edinvest Schools Education (Pty) Ltd in excess of R90 million.

The fund is located within the Impact Funds business unit of Old Mutual Alternative Investments and has over the past six years, allocated R1.3 billion.

The investment will enable the development and operations of three high quality, affordable schools in the Durban area, creating opportunities for 2 700 learners who would otherwise not have access to quality education in the region.

Lala Steyn, head of the fund says that since launching in 2011, the fund has invested in 24 schools with 16 500 learners enrolled in 2017.

“The Schools Investment Fund, which was launched to address the education infrastructure backlog and support the improvement of education in South Africa, partners with expert education operators to deliver not only affordable schooling, but quality education. At present, there are eight school operators rolling out facilities across the country, including Meridian, BASA, Royals and Prestige – to name a few.”

Over the past decade, Steyn says she has witnessed extensive growth of the independent school sector across the board. “From lower fee models, right through to the high-end elite schools, there has been growth in the number of school operators. The biggest area of growth has, however, been amongst middle income families, resulting in a big increase in first-time school operators – especially by young, black professionals.”

Balancing The Social With The Commercial 

The fund has two main objectives when facilitating the launch of a school; one social and the other commercial, says Steyn. “The social objective is measured in terms of the education outcomes being improved year on year and the number of additional children being given the opportunity to learn and develop. Of the matric class of 2016 who sat for the National Senior Certificate (NSC) exam, 93.3% passed and 44.3% achieved a university exemption – far exceeding average national standards.

“It is also incredibly fulfilling to see the transformational power of education. The Meridian Pinehurst School in Cape Town, for example, has its first matric class this year, which includes youngsters who will be the first matriculants in their family.”

Regarding the commercial return objective, Steyn explains that it would be premature to say whether or not this has been achieved before the investments have reached their full-repayment stage. “These investments have a long-term time horizon, and the initial phase – which many schools are currently still in – is characterised by spending, as the schools are being built and set up, with returns only occurring later in the process.

“However, the fund’s returns to date exceed the hurdle and forecasts are good,” she adds.

While the challenges we face in the educational space are vast, Old Mutual Alternative Investments remains committed to working alongside government in order to eradicate some of the infrastructural backlog and improve the overall quality of education in South Africa. At this point, we already have 10 more schools that are set to open in 2018, which means we are right on track to achieving our long-term goal of having enrolled a total of 50 000 learners by 2030,” she concludes.

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