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Childcare the next big thing

LOCAL childcare operations are being targeted by acquisition-hungry operations from the east coast of Australia.

At least one new major operator, listed on the Australian Stock Exchange, has confirmed its intention to buy and build centres in WA. WA Business News understands there are also local groups looking at a listing.

While the rapid corporatisation of this sector has provoked some comparisons with the recent boom and bust in the health sector, there are clear demographic shifts fuelling the market.

Brisbane-based ABC Learning Centres was the first group to list in Australia. Its stocks have increased from the initial $2 listing two years ago to more than six times that value.

More recently, Melbourne-based Child Care Centres Australia listed, while Peppercorn Management Group has unveiled a $5 million initial public offering.

ABC Learning Centres media spokesman Peter Sawyer said the group had only recently moved into WA, where it acquired two centres earlier this year.

“Those centres are in Midland and Gloucester Park and we currently have plans to open six more next year,” he said.

“It’s looking to double the number of outlets by the end of the next financial year.”

Mr Sawyer said all acquisitions of centres were straight cash trans-actions.

ABC Learning Centres has almost 4 per cent of the long daycare centres in Australia.

Peppercorn Management Group managing director Michael Gordon said the group managed childcare centres on behalf of centre owners and investors.

“We have a number of centres that we are in the process of settling in WA,” Mr Gordon said.

“We see good opportunities in WA; it’s a State that’s growing and as such there’s demand for childcare centres.”

In the local market, Cuddles Child Care Centres is one of the biggest operators, with 12 centres across the metropolitan area.

“Our expansion plans would be hinged on the franchise structure rather than a future listing,” Cuddles Child Care Centres director Allan Carver said. “I believe the industry needs a bit of a face lift in terms of professionalism.

He said individual centres had been approached by big east coast operators in the past, however never as a group.

“We’re only selling as franchises, we’re not here to make a quick buck,” he said. “The listed companies aren’t a big threat. I don’t think they’ve got the infrastructure set up or the quality control of people.”

Tony Love is the director of Tonic Holdings Pty Ltd, one of two companies behind Jellybeans Child Care Centres. Mr Love said the company was currently negotiating with a couple of organisations regarding the future of the centres.

“We’re looking at a couple of options but I think it would be best that I don’t comment,” he said.

Mulberry Tree Childcare co-owner Danny Roberts said there were local people interested in developing listed operations.

However, he stressed that any successful operation needed to appreciate the care requirements of the industry.

“We’ve been approached by companies that have already floated and there are also several people in WA looking to float,” Mr Roberts said. “This is a big issue. Childcare is all about the quality of care. The biggest cost is labour.”

p See Property, page 17.

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