Essentials

Company: BASA Educational Institute Trust

Country: South Africa

Region: Africa

Sector: Educational infrastructure

Business Focus: Providing access to high-quality, affordable independent schooling

Size: 2 400 learners

Investors: Schools and Education Investment Impact Fund of South Africa (Schools Fund). The participants in the fund are Old Mutual Life Assurance Company, Government Employees Pension Fund (represented by PIC) and Eskom Pension & Provident Fund.

Investment: Senior debt and preference shares

• Protea Glen students achieved impressive results: the matric pass rate reached 93.3% in 2018 compared with South Africa’s national pass rate of 78.2% in the same year. Protea Glen students also achieved an above average bachelor pass rate of 48% compared to the national average bachelor pass rate of 33.6% in 2018
• There are now improved facilities in schools and boosted teacher training
• Significantly reduced the non-collection rate of fees due to enhanced financial and HR systems and stronger board governance

The BASA story

In 1992, Mr Ludwick Phuthi Sekoakoa and Mr Herbert Maduke Ncube founded the BASA Educational Institute Trust, a 100% black-managed schools organisation delivering high-quality low-fee schooling to children from previously disadvantaged backgrounds in Johannesburg.

Along with passing exams, BASA helps learners develop their personal ambition and sense of purpose. By graduation, they will have gained the qualifications, skills and confidence to contribute positively to wider Society.

In 2013, Old Mutual Alternative Investments (OMAI) – via its Schools Fund – committed R60m to help expand two BASA schools. The funding reflected the BASA management team’s impressive track record, including winning a Department of Education award for Outstanding Academic Results for Senior Certificate Exams.

Funding was focused on the renovation and expansion of BASA’s existing Protea Glen Primary School and the development of BASA Protea Glen High School, which opened in 2015 boasting 40 classrooms, three computer labs, science labs, and various sports facilities. The primary and high school have joint capacity to educate 2 400 children annually.

Today, BASA owns and operates five schools in and around Johannesburg, employing 270 dedicated educators and serving approximately 6 500 students.

A force for good

In addition to reducing inequality, increasing access to opportunities and fostering a culture of inclusion, quality education is essential for a functioning society and thriving economy.

Hlengiwe's story

The achievements of BASA school student Hlengiwe Masikane are testimony to the transformative power of education. Hlengiwe’s strong academic results are a tribute to her dedication, as well as the support she received from staff at BASA’s Protea Glen High School. Her distinctions in numerous subjects as well as her multiple sporting awards are set to serve her future career well.

Some years into her secondary schooling at BASA’s Protea Glen, Hlengiwe’s family faced financial challenges. This however did not deter her from attaining excellent grades that qualified her to enroll for actuarial science studies after matric.

She multi-tasked well as a Head Girl in her final year as a science student. The support she received from OMAI and teachers alleviated the social challenges she faced in this period. Hlengiwe sums up her attitude to education and life in general: “I do well in most of what I do because I give it my best shot. My mom has been my greatest strength and the school my greatest support.”

The role played by Impact Investing

BASA was among the first black operators to benefit from an OMAI Schools Fund investment after OMAI proactively approached its board in 2012 to explore the possibilities of a long-term partnership. The Head of OMAI’s Schools Fund identified BASA as a strong investment opportunity after careful due diligence, reviewing its track record and determining that it would meet the Fund’s investment criteria.

Our approach was well timed – BASA had just completed plans to build a new secondary school and was interested in exploring partnerships which did not require the team to cede control or dilute its vision.

By sitting on the board, we advised on the appointment of a financial accounting firm which helped BASA improve its internal control systems and financial reporting.

School fee collection processes also improved, lowering fee default rates to well below national averages. We also helped ensure that the certification criteria are met when setting up and running a new school.

We supported them in managing their downside risks and enabled the team to build and run larger scale schools, substantially increasing independent schooling opportunities for low income families. We assisted them with reviewing and upgrading their governance, financial and HR systems, working with the board to ensure the continued growth of the school portfolio following our exit.

We also introduced independent school testing to benchmark performance with teacher training budgets and provision of learner support material. One example of our effective partnership came between 2015 and 2018, when we worked closely to secure over R6m per annum in additional central government subsidies, giving BASA an opportunity to lower fees and educate more children from local communities.

Beyond the obvious

OMAI leaves no stone unturned in identifying investment opportunities often overlooked by others that can generate outsized returns. Here are some examples of how our investment in BASA is beyond the obvious:

• Structured the investment to return 100% of OMAI’s equity to the BASA Educational Institute Trust in 2031, having generated a steady return on investment to shareholders
• Understanding the highly complex approvals processes necessary to develop a new school
• Leaving BASA financially and operationally able to continue the growth of its business following our exit

Mr Ludwick P. Sekoakoa, Director of BASA Educational Institute Trust, comments:

“The biggest challenge in infrastructure development for low fee schools is the traditional structural finance systems. Investment in low-fee schools is still an unchartered area.

"OMAI’s model is now the pioneer and may be the beacon for future investor money. There is an even greater opportunity to address school shortages in the country when private investment is ploughed together with state and/or donor funding in low-fee schools.”