Private equity looks to childcare investments

The Dutch childcare providers association MOgroep is drawing up a code of conduct which it hopes will prevent the sector becoming targeted by foreign private equity groups.

The association says the code will ensure a large part of the profits made by childcare providers is reinvested in the sector to improve quality and access.
‘Childcare is 80% financed by the government. Of course you need to make a return on your investment as an entrepreneur. But it should not be about profits but about children,’ MOgroep chairwoman Ina Brouwer told the Volkskrant on Thursday.
Private equity
MOgroep’s concerns follow a report in the Financieele Dagblad which said foreign private equity groups are turning their attention to pre- and after-school care providers.
One company, Catalpa, which has 5% of the Dutch pre- and after-school care market, is being targeted by a number of private equity players, including the US Carlyle group, AEA Investors and BC Partners, the paper said.
Catalpa runs 250 daycare centres and looks after 18,000 children. The company has been 90% owned by investment company Bencis since 2003. The rest is owned by the management. Private investors could be prepared to pay up to €500m for the group, the paper said.
Government policy
Other organisations have also noticed the trend. ‘Big investors from London are asking me how solid Dutch government policy is when it comes to childcare,’ Gjalt Jellesma, chairman of parents association Boink told the Volkskrant.
In total, some 800,000 children in the Netherlands use some form of daycare and there is particular growth in providing after school services.

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