Trematon Capital: Generation Education Disposal Gets Shareholder Approval

• Trematon Capital Investments shareholders overwhelmingly approved the R172 million sale of Generation Education Group to EduFund.
• The disposal includes Trematon's 87% interest in Generation Education, along with related interests and loan claims.
• The sale was prompted by Generation Education's failure to meet growth expectations and declining asset valuations.
• Generation Education's independent valuation dropped from R293 million in August 2024 to R200.7 million by August 2025.
• The technology arm, GenEx, was unbundled in 2024 and is not part of this R172 million transaction.

This highlights the complexities involved in determining the final price in M&A deals, especially when dealing with underperforming assets and various related financial instruments.

Trematon Capital Investments shareholders have given their overwhelming endorsement to the sale of the Generation Education Group. At a special meeting held on Wednesday, a substantial 98.06% of votes cast were in favor of the disposal, with only 1.94% opposing the transaction. This strong mandate was achieved with significant participation, as shareholders representing 86.42% of eligible voting shares took part in the decision-making process.

The approved transaction involves the sale of Trematon's approximately 87% stake in Generation Education, alongside specific related interests and loan claims, for a total consideration of R172 million. The acquiring entity is the Education Investment Impact Fund of South Africa (EduFund), which is managed by Old Mutual Alternative Investments (OMAI). This significant corporate disposal by the listed company in South Africa was initially announced in June.

Trematon's decision to divest from Generation Education stems from the education group's failure to meet initial growth projections. While the school business, established in 2016 by Jevron Epstein in collaboration with Trematon, was acknowledged to still possess growth potential, Trematon's board concluded that realizing this potential would require an extended period of several years. Retaining the investment indefinitely was deemed an impractical approach for unlocking value for shareholders.

Furthermore, Generation Education represented a considerable portion of Trematon's intrinsic net asset value, which the company believed might not be adequately reflected in its listed share price. The group operates six school campuses across the Western Cape and Gauteng, employing an educational model that integrates Montessori-inspired teaching, Cambridge qualifications, and alternative learning pathways with digital content and technology for both classroom and online instruction.

Despite its innovative approach, Generation Education experienced a decline in financial performance. Revenue decreased from R209.1 million in the 2024 financial year to R206.4 million in 2025, while operating profit fell from R30.8 million to R25.4 million over the same period. Trematon attributed this weaker performance partly to a drop in student enrolments, particularly in pre-primary education, as financially constrained parents either delayed formal schooling or explored alternative early childhood education options. However, student numbers have since stabilized, with management anticipating modest growth in 2026, and the discontinued operation recorded a R3.06 million profit in Trematon's February 2026 interim results, an improvement from a R1.98 million loss in the prior year's corresponding period.

The valuation of Generation Education Group saw a notable decline in the period leading up to the sale. Independent valuations disclosed by Trematon show the asset's value decreased from R293 million in August 2024 to R273.5 million by February 2025, further dropping to R200.7 million in August 2025. This represents a significant 26.6% reduction in just six months and nearly a third of its August 2024 valuation.

The final R172 million transaction price is also R19 million below the R191 million fair value reported for the discontinued operation in Trematon’s February 2026 interim results. However, these figures are not directly comparable due to the specific inclusion of shares and loan claims in the transaction, as well as the potential for contractual adjustments. This highlights the complexities involved in determining the final price in M&A deals, especially when dealing with underperforming assets and various related financial instruments.

An important aspect of Generation Education's operations was its technology arm, GenEx, which developed learning management and student information systems designed to support digital learning, automate school administration, and offer services to other educational institutions. GenEx was unbundled from the school group during the 2024 financial year and is now directly held by Trematon, with an effective interest of 30.3%. The 68.2% interest recorded in Trematon's 2025 annual report has since been diluted due to a share issue.

Despite GenEx's prior approval to collaborate with a major US online school on bespoke artificial intelligence and large language model applications, the June disposal announcement did not identify GenEx among the entities being sold. The extent to which its technology assets form part of the R172 million transaction for Generation Education is not specified, indicating a strategic separation of the technology business from the core schooling operations.

Lawyers advising listed companies on significant asset disposals should note the importance of securing overwhelming shareholder approval, as demonstrated by Trematon's 98.06% vote. This case also highlights the complexities of valuing assets, especially underperforming ones, and the need for clear contractual terms regarding related interests, loan claims, and potential adjustments in M&A transactions.

Source: Original reporting via financial news outlets