Since nursery closures and the lockdown were announced in mid-March, new deal activity in the childcare space has been understandably quiet, with most (but not all) live processes going on hold or being called off, and very little in the way of new deals coming to market. Some of the transactions which were announced in the media in April (such as Futurepath) actually completed before the budget announcement on 11 March.
What do we expect from here?
In many ways, the doomsday scenario of mass distress has been averted by a combination of the furlough scheme, continued funding, general re-opening from 1 June and sensible operating guidelines (thanks in no small part to the influence of the Site Operating Procedures drafted by UK Childcare COVID response group) - this combination puts the UK in a better position for survival and recovery than many other countries including the USA.
That means deal activity can be expected to resume soon, and we are aware that a number of parties – both investors and strategics - are already gearing up to start buying again.
What’s not clear yet is what will happen to pricing – it depends on a whole number of factors affecting nursery performance, including how many parents feel comfortable sending their children back and how quickly (early indications suggest more in London than elsewhere), September starters, the wider economy and employment, and whether there will be a second spike of the virus - we won’t know the answer to many of these questions until later in the year.
Latest deals
- Welcome Nurseries acquired its sixth setting, with plans to expand to 2,000 places by the end of 2020.
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Grandir, which owns French operator Les Petits Chaperons Rouges, has further expanded in the UK with the purchase of Futurepath Childcare, which has five nurseries offering 375 places in Hampshire.
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Growing Manchester group MiChild has bought five Network Nurseries settings in the local area. Network has a total of 287 places in its settings in Greater Manchester and Cheshire
- Honeybee's Day Nursery and Forest School has been sold to Kiddigalore.
- KSI Education has bought Heathfield Knoll School and First Steps Day Nursery in Kidderminster.
- Smart Start Day Nursery in the West Midlands has been acquired by Shazia Dhad, a corporate purchaser in the childcare sector.
- Abbots Langley Preschool & North Bushey Preschool in Hertfordshire have been sold to private buyers.