Anchorage buys New Zealand assets from Evolve Education
Australia-based turnaround investor Anchorage Capital Partners has agreed to buy the New Zealand business of childcare provider Evolve Education for an enterprise value of NZD 46m (USD 28.1m).
The business comprises 105 centres under brands such as Lollipops, Active Explorers, Little Wonders, Little Lights, Little Earth, Learning Adventures, and Pascals. The enterprise value represents a multiple of 13x underlying EBTIDA for 2021.
Evolve said in a filing that the divestment would allow it to accelerate growth in Australia, with the proceeds of the sale to be redeployed in acquisitions. Evolve added 13 centres in Australia last year, taking the total to 24, and claims strong occupancy levels and an outsized contribution to earnings. The Australian operation was responsible for 80% of underlying EBITDA in 2021.
The company noted in its 2021 annual report that lockdowns and other restrictions caused by COVID-19 had severely disrupted business in New Zealand. Notably, Evolve’s Auckland-based centres were out of action for a month and subject to capacity limitations at several other times.
Revenue came to NZD 157.9m for the 12 months ended December 2021, up from NZD 102.6m a year earlier, while net profit fell from NZD 7.57m to NZD 741,000.
The New Zealand and Australia revenue contributions were NZD 113.9m and NZD 44m, respectively. Meanwhile, New Zealand generated NZD 9.8m in underlying EBITDA – compared to NZD 16.8m in the nine months to December 2020 – to Australia’s NZD 12.1m.
Anchorage closed its most recent fund on AUD 350m (USD 239m) in 2017. It targets companies headquartered in Australia, New Zealand or Southeast Asia that are operating below their full potential and have at least AUD 100m in annual revenue. The enterprise value sweet spot is AUD 25m to AUD 250m.
The firm has previous experience in childcare, having privatised Australia-based Affinity Education at a valuation of AUD 208m in 2015. The business, which operates more than 150 centres, was sold to Quadrant Private Equity last year for AUD 650m.
This was one of four Anchorage exits in 2021, alongside Facilities First Australia, Solgen Energy Group, and Brand Collective. Meanwhile, the firm acquired wealth management administrator GBST.
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