Busy Bees take acquisition opportunities in childcare sector
Gareth Iley, partner at Clearwater International, looks at recent deals affecting the childcare sector
Staffordshire-based Busy Bees, the UK’s biggest childcare provider, which was acquired by Ontario Teachers’ Pension Plan in October 2013, has certainly been busy this year on the acquisition front. Having already snapped up nursery groups Treetops, for £93m, and Bramleys, as well as single site providers Herriot Hill and Toybox, the company has now made its debut into the Canadian market.
Gareth Iley, partner at Clearwater International
Purchasing Canada’s only publicly traded childcare chain, Brightpath, for £87m, adds a further 77 centres to Busy Bee’s 340 strong holding, and continues the expansion of the company’s global brands which currently includes 56 locations in Singapore and 14 in Malaysia.
Whilst the deal marked the outbound interest from a leading UK player, there also remains significant inbound interest from worldwide childcare providers as a number of investors look at the British education sector as the ‘gold standard’.
Very recently we’ve seen France-based Les Petits Chaperons Rouge (LPCR), the brand name of European family-owned childcare provider Grandir, extend its presence in the UK market by acquiring Kiddi Caru’s 20 nurseries in central and southern England. This followed the group’s purchase of Magic Nurseries in January, which provided an initial platform investment for the 300+ strong nursery group. The acquisition of both groups means that Grandir UK now owns a total of 36 British nurseries.
Towards the end of last year, we saw NYSE-listed childcare provider, Bright Horizons Family Solutions Inc., acquire Asquith Day Nurseries & Pre-Schools, one of the leading providers of high-quality childcare and early years education, operating 90 nurseries throughout the country. The acquisition brought Bright Horizons’ total number of nurseries in the UK to more than 300, and to more than 1,000 in total worldwide.
The demand for nursery places in the UK is high and is set to continue to grow driven by a number of factors:
- The number of mothers with children under four in full-time education – which is currently estimated at 45%;
- The increase in the average age of a first-time mother – the proportion of women giving birth aged 35 and over is now triple the rate of the start of the 80’s. This partnered with the increase of mothers in employment, who are typically more established in the labour market than previous years, are more likely to require nursery services and are able to afford them; and
- Government subsidies – the current provision of 15 subsidised hours of childcare per week in England to support working parents doubled for eligible parents in September 2017 to 30 hours.
These all combine to create a sector that is very attractive, and with the market highly fragmented and therefore ripe for consolidation, there is certainly ample opportunities for operators, and we’d expect the level of M&A activity to continue.
