Nursery Chains 2023: Groups by size – gaining ground

Firmly ensconced as the top three groups by size in the UK nursery market are Busy Bees, Bright Horizons, and Kids Planet.

While the two biggest players have remained dominant for many years, Kids Planet is now firmly established as the third largest group in the country, adding 48 more nurseries in the last year and 3,673 places.

However, the group that can lay claim to the largest growth in the last 12 months is Family First, which has more than doubled in size to just shy of 100 settings.

Now the fourth largest, it has exceeded its stated ambition to grow to 80 sites by the end of 2022, backed by investment from August Equity.

Since our last issue the rapidly expanding group, which was only established in 2019, has grown by acquiring medium-sized and small groups, as well as a number of standalone settings throughout the country.

In June, it acquired Davidson-Roberts, a group of ten settings spread across Bedfordshire, Cambridgeshire and Northamptonshire.

In December, Family first bought Cherry Childcare, a group of 11 settings, based in Surrey, Hampshire and Berkshire.

It has also acquired two nurseries that were previously owned by the Childbase Partnership: Oaktree Day Nursery in Finchampstead and Victoria House Day Nursery in Marlow.

The group says it plans ‘to acquire further day nurseries that fit the group’s ethos and family-based culture’.

Close behind is another group that has leapt up the table from 11th position to fifth – Bright Stars, formerly known as ICP Nurseries.

Rebranding and changing its name last summer, after Oakley Capital became a major stakeholder in the business in May, the group has grown from 50 nurseries in last year’s table to 93. Bright Stars also has a new 155-place acquisition in Surrey opening this spring.

In sixth position is Grandir UK, which has acquired nearly 20 sites over the past 12 months, including the ten-strong group of Three Little Birds and the London Pre-schools last November, the three Maggie & Rose nurseries in London in August, and the Rushcliffe Day Nurseries group of three settings in Nottingham in June.

Grandir UK, which is French-owned, trades under the Kiddi Caru and Dicky Birds brands, and now operates settings across the country in London, the South West, the Midlands, South, East, and Central England.

Two other European-owned operators continue to expand in the UK, with Dutch group Partou acquiring All About Children’s 38 nurseries in the autumn to add to its 2021 acquisition of Just Childcare, and The Old Station, owned by Swiss provider La Maison Bleue, adding 18 sites since last year’s edition (see also our overview on page 4).

Courteney Donaldson, managing director, childcare and education, Christie & Co, told Nursery Worldthat market activity during 2022 proved to be significantly better than initially expected, with the number of transactions substantially ahead of that of previous years, ‘as demand outweighed supply and acquirers sought to consolidate and gain further market share of the most desirable nursery businesses’.

Family First, Kids Planet and Bright Stars consolidated their respective market shares in acquiring 55 per cent of nursery businesses, both single-assets and groups, brokered by Christie & Co.

Fennies Nurseries is the one new entrant to the table; in 24th place, it now operates 18 nurseries.

Absent from the table is WelcomeNurseries, which in early 2022 operated more than 40 nurseries.

Welcome grew to be one of the largest nursery groups in the UK in just over three years, but went into administration with estimated debts of more than £3.5 million in August, after closing more than 20 settings.

What remains of the group is now owned by entrepreneur Simon Fox as Harp Group Ltd. Twenty-six sites and the head office were acquired by Fox for £500,000, according to documents published by Companies House. However, Harp Nurseries’ website now lists just 12 sites, while Ofsted lists 16 as registered under the company name. As we do for all groups in the directory, Nursery World has contacted Harp Nurseries for the most up-to-date information, but has been unable to verify the details for these nurseries.

Elsewhere in the directory it is notable that some medium-sized groups have lost one or two settings in the past year.

Increased caution

Commenting on the market, Arun Kanwar, partner at Cairneagle Associates and Nursery Worldcolumnist (pictured), said 2021 and 2022 had seen significant mergers and acquisitions and consolidation by many of the groups, including geographic diversification into regions such as the Midlands and North-East.

‘This year has already got off to a strong start, however, almost every group we are speaking with is being more selective about acquisitions over the coming 12-18 months.’ He puts this down to a number of reasons, including the need for higher and more certain performance per nursery, availability and cost of debt, and ensuring that the acquired business can navigate the challenges currently facing the sector – ‘staffing, cost inflation and squeeze on parent wallets. So while consolidation will continue (from what remains a fragmented base), we expect it to continue to be heavily weighted to more affluent socio-economics and stronger financial performance.’

The benefits of groups are ‘stronger than ever’, he says: ‘balance sheet security (the many can support the few through short-term challenges), investment in quality, sharing of administrative burden and navigating through challenges such as staffing.’

Ofsted grades

Our annual analysis of Ofsted reports of the 25 biggest groups is notable in the drop in Outstanding to Good grades, about which some sector leaders have already aired their concerns.

The number of Outstanding grades in this year’s table is down from 389 to 369, a drop of 20.

N Family Club retains its top spot, with Childbase in second place, but Children 1st, third in this table in 2022 with 13 Outstanding nurseries, has seen all these settings reinspected over the last year and they are all now rated as Good.

It remains to be seen whether this drop from Outstanding to Good, in the wake of the pandemic, becomes part of an ongoing trend.