Nursery group Busy Bees hits the expansion trail

Catherine Gaunt
Monday, July 25, 2011

Busy Bees has acquired Q Day Nurseries as the first step in a plan to continue to expand the biggest nursery group in the country.

The three Q settings are in Corby, Farnborough and Ashford.

Finance director Simon Irons said Busy Bees was keen to add more settings to its portfolio.

'We have a desire to expand and it makes sense to buy small groups,' he said. 'These are the first three nurseries. They're the right price and the right staff and buildings.

'We're really pleased with the managers and the staff teams. It took us about ten months to cement the deal.'

Mr Irons said there were also plans to expand the Corby nursery.

He confirmed that Busy Bees is spending £300,000 in refurbishing the three settings.This involves developing the outdoor areas and reconfiguring the space to facilitate more free-flow, as well as investing in new equipment and ICT.

Q Day Nurseries opened its first nursery in 2006.

Dean Durham, director of Q Day Nurseries, said, 'Over the last few months we have been giving a great deal of thought to the next stage of development for our nurseries. We took the difficult decision that our nurseries would have a far greater chance of developing to their absolute full potential if they were under the ownership of a bigger, more experienced group.'

Finance experts say there is increasing appetite in the childcare market for expansion.

Venture capital firm Downing LLP has recently invested in Gingerbread Pre-Schools, which will open its third site in the autumn and plans to build the chain to up to ten nurseries in north-west England and north Wales over the next five years.

The move follows Downing LLP's previous investments in the Nu Nu nursery chain and Complete Childcare. In both instances, the investments enabled the businesses to acquire additional trading nursery sites and grow their operations.

Tom Phillips, investment manager at Downing LLP,  (RIGHT), said, 'We are really positive about the sector and with funds available to invest, we remain interested in looking at new investment opportunities with existing owners and operators.

'Downing invests in low-risk, asset-based businesses, with experienced management teams.

'Children's nurseries can be an excellent investment, particularly while the valuations being put on the businesses remain within a sensible range,' Mr Phillips said.

But he added, 'There are not a large number of transactions taking place at the moment. This is due to a combination of factors, including a restriction on the total finance available to the sector, the banks requiring a greater equity or cash contribution from nurseries on new deals, and owners being prepared to bide their time and wait for the right deal to come along.'

He predicted that the sector will probably need to wait a couple of years before the next 'blockbuster' transaction.

'I don't see the market dynamics changing particularly quickly. There are still good opportunities out there, but it will be at least a year or two before we start to see a significant increase in the volume of transactions.'

Ian Murchie, (right), relationship director in the Healthcare Team at Barclays Corporate, said, 'There seems to be confidence returning in terms of growth, with a few operators looking for opportunities to expand.'

He added that nursery businesses do not appear to have been affected by funding cuts to the same extent as other areas in healthcare, such as elderly care, because they do not have the same direct reliance on local authority funding.

'For parents, good-quality care is their absolute priority and they are prepared to pay for good-quality provision. Fees are holding up well, and well-run operators with a good reputation are able to secure funding.'

He said the level of borrowing that nurseries are able to secure and the contribution they need to put in to secure finance is reviewed on a case-by-case basis.

'Occupancy levels are pretty resilient because nurseries are a needs-based provision.'

Mr Murchie said that banks are willing to lend to good-quality nurseries, which have a good reputation and are able to build occupancy locally, provided they have not overstretched their borrowing.

'A lot of providers who have run their businesses very sensibly are able to take the opportunity to secure debt finance.'

He said that Barclays Corporate continues to support both small operators and larger chains with funding for acquisitions or to expand existing settings.

'The outlook for the next six to 12 months is very positive for very well-run groups, but others might find it more challenging.'


  • The Co-operative Childcare buys the Buffer Bear Nurseries chain of 24 settings to create the UK's largest nursery group run along social enterprise and co-operative lines. The new combined group will operate a total of 32 nurseries providing more than 2,000 childcare places throughout England.
  • Durham-based Clever Clogs acquires two new settings in Hartlepool and Durham in a deal worth half a million pounds.
  • Kids Allowed opens its fourth nursery in Macclesfield, offering 161 places, and plans to expand at a rate of two settings a year. The nursery also offers a breakfast club, an after-school club and a holiday club for up to 200 children.
  • Casterbridge Nurseries acquires two settings in Swanscombe and Dartford in Kent.
  • Merseyside-based Gingerbread Pre-School, which currently has two nurseries, acquires two more nurseries for refurbishment, after securing 'substantial' investment to grow a ten-strong nursery group. The third setting plans to open in autumn 2011 and the fourth setting early next year.
  • Busy Bees acquires three settings owned by Q Day Nurseries, adding a further 267 childcare places to the group, which now offers more than 12,000 places.

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