Large nursery groups 'hungrier' for growth, report suggests

Larger nursery groups are expected to continue to grow in 2020, buying up single nurseries and small chains, predicts childcare property broker Redwoods Dowling Kerr.

Large corporate groups are predicted to continue to buy up smaller nursery businesses
Large corporate groups are predicted to continue to buy up smaller nursery businesses

In its new Global Childcare Property Report, which outlines activity in the childcare property market in 2019 and makes predictions for this year, Redwoods Dowling Kerr (RDK) says it expects there to be further acquisitions by large corporate operators in 2020 which will increase the market share as a percentage by operators with greater than 20 settings.

It is believed by RDK that Bertram nursery group, which grew by 17 per cent in 2019, is seeking further acquisitions.

The report claims that childcare providers with 20 plus settings, referred to as ‘corporate operators’, have become ‘more aggressive’ in their approach and ‘hungrier in their appetite’.

It says that some of the larger groups ‘cherry pick’ settings from small chains (operating up to four nurseries), choosing settings that ‘complement their group strategy’.

‘Mid-tier groups’ (with between five and 20 settings) are also ‘prime targets’ for the larger corporate operators as they grow, warns RDK. However, it says that a number of these groups are on the expansion trail and looking to become corporate operators themselves.

RDK’s report also predicts:

  • A significant amount of international investment in the UK in 2020. It says that the weak value of the pound by historic standards and the low level of interest rates on offer make for a ‘healthy investment environment’.
  • Investors from a wealth of new countries investing in the childcare sector.
  • More UK operators will enter into partnership and initiatives with overseas organisations.

A spokesperson for Redwoods Dowling Kerr said, ‘In 2019, we brokered in excess of £50m worth of transactions and we are very excited about 2020 as we carry forward a significant number of deals that we expect to complete in the first quarter of this year.

‘2019 was a fantastic year for childcare business sales. The performance of the sector was nothing short of outstanding given the levels of political uncertainty caused by Brexit and the continual soap opera which the House of Commons has been in recent years. It is testament to the sector’s entrepreneurial spirit that the external influences did not impact on the business growth and acquisition aspirations.’

  • The report is available here 

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