The Education Sector—A Diamond in the Rough for Long-Term Investors
Published: February 7, 2024
Miscellaneous
Few industries are as resilient to economic fluctuations as education. Over the past five years, Tellusgruppen has grown by an average of 30 percent. The foundation has been laid for continued expansion; the company is now conducting a rights offering to broaden its shareholder base and take the next step.
“Our short-term goal is to generate half a billion kronor in revenue. The Tellus Group’s aggressive growth strategy has been driven by both organic growth and acquisitions, which has made us a company with a comparatively low valuation and promising prospects,” says Bijan Fahimi, CEO of Tellusgruppen.
Tellusgruppen is one of the fastest-growing players in the education sector, with operations in preschool, elementary school, educational resources, meal services, and childcare. Over the past five years, average growth has been 30 percent; today, the company has revenue of approximately 350 MSEK. Bijan Fahimi, CEO of the Tellus Group, has no plans to slow down.
– We have built a well-established and stable platform through both acquisitions and organic growth. We are a growth-oriented company in an otherwise conservative industry, which has also made us one of the fastest-growing players, despite a turbulent global environment and a slowing economy.
At the same time, Tellusgruppen naturally maintains the high standards required to provide education at the national level.
– In our industry, it’s not enough to be good—you have to be excellent.
An industry with great potential
Investing in education companies has both advantages and disadvantages. The political risk is higher, and there is a lively debate in the media over whether independent schools should exist or not. But Bijan Fahimi believes the risk is overestimated.
– There are two million schoolchildren in Sweden; just over one in five children currently attends an independent preschool, elementary school, or high school. No political party is going to risk alienating potentially one million voters—that is, the parents—by changing the law so that independent schools can no longer exist.
A study by the National Association of Independent Schools shows that independent schools receive approximately 9 percent less in funding than municipal schools, even when taking into account the municipalities’ overall responsibility and differences in student composition.
– If all schools were as effective as independent schools, taxpayers would therefore have to pay less to fund school operations.
The rapid growth rate of Tellusgruppen —which has come at the expense of higher profitability—combined with significant political risk, leads Bijan Fahimi to believe th Tellusgruppen is a diamond in the rough for investors.
– Invest in companies you believe in that are undervalued, and then hold onto the shares for the long term. That’s Warren Buffett’s philosophy, and it aligns well with the Tellus Group’s current market position.
Conduct a public offering to facilitate future investments
From January 29 to February 16, Tellusgruppen is conducting a public offering. The goal is to broaden the shareholder base, increase the company’s liquidity, and raise capital to support future investments.
– This could involve new acquisitions or further developing related services in the field of education. Among other things, we are investing in AI, primarily to streamline time-consuming administrative tasks such as course planning, resource requests, and more.
Going forward, the company will focus its efforts on schools and educational resources, such as native language services.
– By diversifying the Group’s offerings, we also create synergies and can sell services that go beyond education.
When asked why one should invest in Tellusgruppen , Fahimi replies:
– We have proven that we can grow rapidly while maintaining high quality. The foundation we have built today is essential for creating a company that grows and delivers high profitability. It’s only a matter of time before we reach half a billion in revenue.
“We want to bring on board investors who share our vision, believe in social impact, and have a long-term perspective,” says Bijan Fahimi, CEO of Tellusgruppen.