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LDC new centre supply steps lower in Q1 2021, post COVID moderation continues

  • Published June 17, 2021 12:00AM UTC
  • Publisher Wholesale Investor
  • Categories Company Updates

The growth in supply of new long day care (LDC) centres across Australia has continued to moderate post the onset of the COVID-19 pandemic with the latest Australian Children’s Education and Care Quality Authority (ACECQA) latest NQF Snapshot reporting a 3.3 per cent increase in centres, the lowest rate since Q1 2017. 

The snapshot, which is released quarterly and sources data from the National Quality Agenda IT System (NQA ITS), saw 89 new LDC centres opened in the quarter, substantially lower than the 117 centres recorded in the same period last year.

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The ongoing moderation in supply is broadly consistent with indications from the early childhood education and care sector’s two largest REITS, Charter Hall and ARENA, which both reported contractions in their development pipelines, with Charter Hall in particular signalling a significant drawdown. 

That being said, larger providers such as G8 Education have signalled a resumption in their greenfield pipeline, after a multi year hiatus in pipeline growth, is on the cards in 2021 with ten new centres expected to open.  

NSW contraction is key driver, although other states also contributing 

Across the states and territories of Australia New South Wales appears to be the key driver of the ongoing moderation with a 2.5 per cent annual increase recorded, the lowest since ACECQA started publishing the series. 

The reduction in NSW supply is notable given the sharp increase in fees of 3.5 per cent recorded in the broader Sydney metropolitan area in the Q1 2021 Consumer Price Index data released by the ABS which perhaps reflects the market responding to a more favourable supply demand dynamic and actively pricing accordingly. 

Across the other key states on the east coast, and in Western Australia also reported either stable or falling new LDC centre supply. 

Early Education Holdings confirms equity offer fully subscribed, plans for next steps

Early Education Holdings, the community focused early education and care (ECEC) provider that recently launched an equity offer to fund the purchase of two ECEC services in Sydney, New South Wales has confirmed the offer has been fully subscribed.

In addition, the Group confirmed that it was well advanced in progressing the transaction towards settlement with conveyancing and license applications progressing as planned. 

“We are humbled to have received such a quick resolution to our equity offer. It is testament to the hard work of the EEH team as well as the uniqueness of our offer,” a spokesperson said. 

“Over the course of the next several weeks we will be working on the additional components of the transaction, including conveyancing and licensing, with a view to settling the services as soon as possible. 

About Early Education Holdings

Early Education Holdings* (EEH) is a newly established partnership with an ambitious vision to acquire and develop local, community focused childcare centres across the Eastern seaboard of Australia. Childcare centres are a stable, government backed business funded by both Federal and Sate & Territory governments, and with the outbreak of COVID-19 contributing to the recent fall in attendence across the sector, EEH has identified the neglected and highly fragmented mid-sized market (40-75 places) as ripe with opportunity.

EEH would like to invite investors to participate in co-owning TWO established childcare centres in urban NSW, which represents a foundational milestone and the commencement of the EEH growth journey.

EEH’s Executed Team is powered by HEVEN, a business management company that makes SME ownership a reality for individuals looking for a low touch approach to income and portfolio growth. Founded in 2016 by one of the partners, HEVEN takes an industry-agnostic approach and specialises in sourcing, acquiring and managing government funded and high consumer demand SMEs, with an established revenue, across Australia.

HEVEN offer’s a streamlined pathway to business ownership by focusing only on identifying the right opportunities at the right life-cycle and a unique stewardship model which oversees the businesses’ operations on the clients’ behalf. The client journey starts with a single business and can grow to a diversified portfolio with time.

HEVEN currently has 15 businesses under stewardship with an aggregated annual revenue of ~$30m. Their model is proven, scalable, income generating and drives long term growth for businesses and clients.

*Registered entity name to be confirmed

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