Australia’s Anchorage agrees $150m Affinity Education deal

The Anchorage proposal will see A$0.90 per share in cash returned to Affinity shareholders, according to a regulatory filing. It is subject to finalization of due diligence and shareholder approval.

Affinity directors reiterated their recommendation that investors reject G8's bid of A$0.80 per share in cash or one G8 share for every 4.25 Affinity shares. The board's position is that neither offer is fair or reasonable. G8 is already Affinity's single largest shareholder with a 19.89% stake in the business.

Affinity owns and operates 161 childcare centers nationwide and manages a further six facilities. It has a daily licensed capacity of 12,682 children and focuses on those aged six weeks to 12 years. The company has been increasing its footprint, acquiring 68 childcare centers in 2014 and 36 in the first half of 2015. It is the second-largest listed childcare operator in Australia after G8, which owned 457 childcare centers domestically and 18 in Singapore as of June 2015.

Affinity's revenue came to A$111.9 million in 2014, up from A$3.67 million for the period from May 21 to December 31, 2013. The net loss was A$4.12 million, down from A$8.86 million in the earlier period. EBITDA reached A$1.5 million in 2014 - rising to A$17.9 million if acquisition and integration expenses are excluded - compared to a loss of A$9.3 million in 2013.

Australia's childcare sector remains highly fragmented, with 83% of providers managing only one facility. Just 1% of the for-profit industry comprises operators with 25 centers or more. In addition to the consolidation opportunity there is also policy support, with the government keen to encourage mothers to return to work after having children.

Anchorage is not the only private equity firm to target the sector. In 2013, Navis Capital Partners bought Guardian Early Learning Group - the number two ranked provider of private childcare services in Australia - from Wolseley Private Equity for A$120 million.

Anchorage is currently investing its second fund, which closed at the hard cap of A$250 million in April 2013 after less than six months in the market.

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• Topics
• Buyouts
• Australasia
• Consumer
• Anchorage Capital Partners
• buyout
• Australia
• Education