Catalpa: Who’s afraid of big bad private equity?

Politicians should have the courage to tell people to stop moaning about private investment in the public sector, writes Barend van Lieshout.

Private capital funds care organisations, it’s hardly a novelty. But not every company’s transaction details and year results are as out in the open as Catalpa’s, the childcare giant bought with private equity money. The Catalpa case could prove an interesting test case for the care sector because investment in the public sector is a topic fraught with emotion.
Catalpa was bought by Providence, a US private equity group. It provided Catalpa with the considerable loan of €225m which means the company is not turning a profit. In the media one statement followed on the heels of another: ‘that means a debt of €13,000 per child’, ‘it’s a fiscal loophole’, ‘unfair competition’ and ‘parents should opt for childcare that is financially sound.’ Market forces in childcare may have increased choice and improved quality ‘but perhaps we should question whether the market is the right place for childcare.’
No one is doubting the quality of care at Catalpa’s daycare centres.
Tax dodge
It’s not the sort of comment you will hear about other service providers. You don’t want to know how deeply in debt your hairdresser is. Whether or not your legal advisor has a trust fund tax dodge is probably unknown to you and when you choose a window cleaner his debt paying capacity is sure to play a minor part in your deliberations.
But when we are discussing childcare emotions come into play. That is because childcare ‘belongs’ to us. It’s a common good, right there between the consultation bureau and primary school. It is our right to know exactly what is going on and not only that, we also feel we have a say in how things are run and by that we mean: not as a business.
Mind your own business
What I miss in the public debate is the voice of politicians with the courage to say: What are you moaning about: the quality is good, there’s plenty of choice. Now mind your own business. Instead, they profess to be worried, promise to confront the minister and suggest that perhaps the law should be amended.
We can expect an identical discussion in the care sector when it sees a more transparent influx of private capital. Of course money will be made and of course taxes will be brought back to a minimum. Those who cry shame should be consistent and point the finger at other profit making sectors and boot out all those foreign trusts which are bringing in such nice profits for the Netherlands.
An emotional instead of a rational approach will not make private investors opt for Dutch care and it will certainly not encourage transparency.
Barend van Lieshout is a care advisor at Rebel

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