Just Learning, which owns and manages 68 nurseries, said the 'acquisition chest' would ensure it continued to be a key player in a rapidly changing market.
Jonathan Bell, managing director of Just Learning, said the investment bank Ares Capital Europe had taken on the nursery chain's debt and agreed to lend the group £10m to fund expansion, which he said would be sufficient to buy a small nursery chain.
In addition, the company's largest investor, the Alchemy Investment Plan, has said it will inject more capital if the right deal emerges from the current sector-wide consolidation, enabling Just Learning to buy medium-sized companies.
Mr Bell said Just Learning was interested in buying nurseries based on their merits, whether they were individual nurseries or small and medium-sized chains.
He said, 'Trading has been good in 2007 and 2008. We've had a much stronger year in terms of occupancy and are on our way to achieving or beating our budget.'
Occupancy is currently around 60-65 per cent, based on full-time equivalents, he said.
In 2006 Alchemy had been interested in selling the company.
Mr Bell said, 'If the timing had been right, we would have wanted to talk to ABC (Learning Centres).
