Post-Brexit Economic Blues? Not In The Day Nursery Sector…
According to Christie & Co's Courteney Donaldson, market watchers expecting to see a post-Brexit downturn in the early years sector will be waiting a while…
Despite media reporting of the impending doom and gloom in some sectors of the UK property market, the activity that we’ve seen this year makes it clear that this potential misery will not be applying to the day nursery market.
Over the course of 2016 we’ve seen that confidence in the childcare sector has been high, with a constant flow of deals taking place, and a torrent of potential buyers looking to make purchases. Independent operators and corporate providers alike have been putting their money where their mouths are and investing in the care of our most precious assets.
Throughout commercial property, there was a sentiment of caution prior to the EU referendum on 23 June, but the childcare sector seemed different somehow. There was no hesitation on deals, and no jangling nerves about what could, might or would happen.
Indeed, the market was solid throughout the run-up to the EU referendum voting date, with nurseries changing hands as normal.
Continuing investment
Post-Brexit decision, analysts might have expected the market to start twitching. With no idea of how, when, or even if the Article 50 button would be pressed, and the appointment of a new prime minister and cabinet to boot, you would think that activity would slow down a little as operators and investors focused on the implications of an EU exit. This has absolutely not been the case, though.
In the eight weeks following the Brexit outcome announcement, Christie & Co completed 26 nursery business sales with an aggregate capital value in the order of £30.79m. Investor confidence remains strong, as evidenced by our high-value sale of Positive Steps Group to Busy Bees and the sale of the Little Unicorns Group, based in the heart of financial district Canary Wharf, which both completed in August.
The Little Unicorns deal is interesting to note, given its location. As rumours of banks relocating to mainland Europe and financial sector job losses abound, this clear confidence in a group based in a part of London that relies on financial security to fill its nursery places is a real demonstration of confidence in the sector – particularly as the group has been acquired by Bright Horizons Family Solutions, which has its head office in the US city of Boston.
The deal therefore evidences confidence around inward-bound UK investment, regardless of any reported financial uncertainty. These deals were concluded hot on the heels of the pre-Brexit investment of a £27m funding deal facilitated by Barclays into Treetops.
It’s not just the larger groups that continue to hold banks’ and investors’ confidence, however. In recent weeks, north-west nursery group Kids Planet have also received a £10m war chest to aide their expansion plans, so I think it’s wholly evident that investor, bank and operator confidence is strong when it comes to childcare.
A positive outlook
In addition to these large corporate deals, we’ve also seen a high level of activity across the regional markets. Despite the Brexit uncertainty, concerns about job security, the fall in the price of Sterling and in Scotland, rumblings about a second ‘once in a generation’ UK-exit poll, we have seen nurseries changing hands from Purley to Edinburgh and Wellingborough to Wrexham, as well as everywhere in between.
As we move into the second half of the year, it’s safe to say that the childcare market is not singing the post-Brexit blues. It’s a great time to be investing and working within the sector, and this is likely to continue for the foreseeable future.
Christie & Co has provided valuable advice to clients within its specialist sectors for over 80 years. The business was established in London in 1935 and has successfully expanded to provide professional brokerage and advisory services throughout the UK and across Europe.
As well as deal brokerage, structuring and financing, its professional services include: valuations, consultancy, insolvency services, investment guidance, feasibility studies and advice on rent reviews, building surveying, dispute resolution, rating and development. For more information, visit www.christie.com or follow @christiecouk
