Children's services are proving an enduring attraction to investors seeking an alternative to structured products
Mid August and it's time for many adults to get reacquainted with children. It doesn't matter if they are not your own, for they swarm in the streets, on the beaches, in the parks and cafÃ©s. It is impossible to avoid them. School holidays remind those who otherwise try to lead normal lives that they are actually at the beck and call of hosts of little people.
Even bigger children are infinitely demanding. Adults not suddenly required to impersonate Dipsy, or accept a bey blade challenge, have to hand over cash or the car keys. In situ carers, usually but not always mothers, seem to embark on an unofficial work-to-rule during this month. Who dares call it a conspiracy? The perfect revenge of a demanding adult is to be landed with an even more demanding child.
No wonder then, that sane thoughts turn to how to manage the problem. If you begrudged £70 for a Gameboy in June, it seems cheap in August. Ditto all those electronic DVD interactive thingies that are almost certainly responsible for the increasingly delinquent speech of your 10-year old. All day television? Why not? It keeps them occupied, and anything that does that relatively safely is worth stumping up for.
Perhaps this is why, in recent years, children's services have become a favourite with shrewd investors. Leapfrog was one of the first nursery chains to attract attention, but demand for childcare, running from birth to uni, is growing exponentially across the UK. Parents have discovered that it is a great way to remain friends with your children. Entrepreneurs are pushing at open doors. Pre-schools, after school clubs, childminders and kids' activities clubs are doing a roaring trade. Teather & Greenwood has just extended the offer period on its sixth children's nurseries Enterprise Investment Scheme. The first one was launched in 1994 and the series has gone from strength to strength. The Childcare Corporation 6 plc (TCC6) has already raised over £2m and is aiming for £10m before close on 3 October. TCC currently owns and operates nine nurseries across the UK, with more under construction. The UK children's day care nursery sector is maturing rapidly and growing at an annual rate of 15%-20%. It is currently valued at around £2.2bn, five times bigger than it was at the beginning of the 1980s. Another corporate action, the acquisition by Just Learning of Careshare, Scotland's biggest nursery operator, for £17.3m, has recently re-focused attention on the opportunities available.
Anecdotal evidence suggests that well-heeled customers are still scrabbling to find places for their children in the best establishments. Of course these are tiny companies, but an asset-backed, high growth sector with some consolidation in the near future is worth a closer look, especially given the tepid temperature of other options.
Investment vehicles designed to help ambitious parents fund kids' activities, including private education, are seeing greater than ever take-up. Few can afford the basic private school fees of £20,000 per year per child out of cashflow. But investment in education has an enduring attraction that commitment to say, structured products, doesn't quite achieve. Financial advisers say their biggest problem right now is to interest clients in anything remotely connected to stock markets. The long summer holidays could be a great time to remind them that provision for the entertainment and advancement of their precious offspring is a noble, nay necessary goal. They'd get the eternal gratitude of the rest of us, as well.
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