Lesson time for early education investors
School’s out for the childcare sales processes in the market.
First out the gate is Partners Group’s Guardian Childcare and Education, which is understood to be winding up its first round of investor presentations and distributing flyers.
The childcare business first came across Street Talk’s radar in November after Partners began asking investment banks to pitch on potential deal structures, buyers and valuations in an effort to win the sell-side mandate.
Childcare fees are outstripping inflation and wages growth. Ryan Stuart
Following closely behind is rival Affinity Education. As Street Talk revealed in March, its owner Quadrant Private Equity kicked off a strategic review and, while a process has not formally commenced, Affinity has received inbound interest from interested parties.
Quadrant has tasked sell-side advisers Barrenjoey and Jefferies with preparing a sale process, including organising early education meetings (pardon the pun) with interested parties. If sold, it would be one of the biggest childcare deals ever in Australia, expected to be worth north of $1 billion.
The $14 billion childhood education sector is blessed with strong tailwinds and plenty of opportunities to scale up because it remains so fragmented. Corporate operators with sufficient scale for sustained investment represent just 20 per cent of the sector.
But, it’s also a tough business to make money; G8 Education and Goodstart Early Leaning will testify to that, battling staff shortages (amplified by strong demand) and the rising cost of wages, rent, food and electricity. Both operators have jacked up fees.
G8, which struggled for several years, posted a 19.9 per cent lower full-year profit to December 31 of $36.6 million while maintaining
Read more on afr.com
