The private equity backer of a global nursery group is seeking to exit its significant minority position in the business, EducationInvestor Global can reveal, at a time when consolidation in the early years sector continues apace despite pandemic-linked headwinds.
This publication has learnt from five sources that Eurazeo, the Paris-listed private equity sponsor of France-based childcare chain Grandir, is seeking a buyer for its 41% stake in the company. BPI France, another buyout group, owns 8% of the firm, while the remaining 50% is held by its president Jean-Emmanuel Rodocanachi, who founded the organisation in 2000.
“Jean-Emmanuel is not selling – but he is reshuffling the shareholder structure to allow Eurazeo to exit,” a banker close to the business told this publication on the condition of anonymity. “There is no live sell-side mandate right now as it is very early days.”
Prospective bidders, including European buyout groups, are starting to circle the business, inviting pitches from commercial due diligence providers, one well-placed advisor told this publication.
Grandir, which Eurazeo bought into in 2016, when it was reportedly valued at €290 million, operates more than 650 childcare centres across France, Germany, the UK, US and Canada through four subsidiaries – Les Petits Chaperons Rouges, Infanterix, Kiddi Caru and Kids & Company. Over 500 of its centres are situated in Europe.
Statutory accounts filed in France show that Grandir’s French operations – which fall under Les Petits Chaperons Rouges – generated annual revenue of €177.7 million in 2019, the most recent year for which financials are publicly available. In 2015 – the year prior to Eurazeo’s takeover of Les Petits Chaperons Rouges, before it sat under the Grandir umbrella – the company booked turnover of €144 million.
Grandir’s current enterprise value and financials are unclear.
A sale of Eurazeo’s stake in Grandir – for which it paid €134 million around five years ago – is being explored at a time when one of the company’s main competitors in France, La Maison Bleue, is also on the market, according to MergerMarket. The publication’s report, which cites anonymous sources, stated that Grandir may bid for La Maison Bleue, in which BPI France is also a minority shareholder.
In the UK – where Grandir has bought around 40 nurseries since entering the market in 2017 – two of the country’s largest childcare operators, ICP Education and Just Childcare, were acquired in off-market deals executed this month. Meanwhile, Kids Planet, which operates nearly 60 nurseries across England, has hired corporate financiers to explore strategic options that include a £200 million sale, as revealed by EducationInvestor Global in April.
These processes highlight an unrelenting appetite among investors – both strategics and private equity houses – for European childcare assets, despite pandemic-induced downward pressure on valuations.
Babilou, France’s largest for-profit childcare provider with operations worldwide, was acquired last August following an auction process hampered by Covid-19. Antin Partners, a private equity house, reportedly paid €1-1.5 billion for the business – at least €500 million less than the initial asking price of €2 billion, as reported exclusively by this publication.
Bright Horizons, which is listed on the New York Stock Exchange but is the second-largest childcare operator in the UK, where it owns hundreds of centres, is trading at a 16% discount to its pre-pandemic high reached in February last year.
Eurazeo is also gearing up to offload its stake in Sommet Education, an international hospitality-education provider that recently closed an acquisition in South Africa, which Rothschild & Co has been retained to sell, as revealed by this publication in April.
A spokesperson for Eurazeo declined to comment on its potential exit from Grandir.
Date published: 9 June 2021