Affinity Education Group

Private Equity Manager (GP)

Case study

About the company

Affinity Education Group (“Affinity”) provides educational services and care, including daycare, before- and after-school care and occasional care for children through the ownership and management of its childcare centres in Australia. Affinity’s portfolio consists of over 150 daycare centres throughout Australia, supporting more than 15,000 children. More than 50% of Affinity’s revenue is derived from the Australian federal government, under its child benefit rebate scheme.

Investment Rationale

• As the third largest player in the Australian childcare market, Affinity enjoys brand presence and a geographic footprint which captures a core clientele.
• Supply/demand imbalance in the daycare market has resulted in attractive pricing for Affinity’s services.
• Increased funding availability from the Australian Government for childcare provision to support market growth.
• Anchorage Capital Partners (“Anchorage”) had a pipeline of 11 centres targeted for acquisition and were looking to reduce costs through the divestment of 15-20 underperforming centres.
• Anchorage engaged with Affinity management on ESG issues during the due diligence process and the company has satisfied requirements for all aspects including its employee approval systems, adherence to childcare regulations, absence of litigation and its employee assistance and whistle blower programmes.

Active management and value creation

Anchorage developed a comprehensive performance improvement programme to leverage the full potential of Affinity’s portfolio of early education long daycare centres. This included:

• Installation of a new leadership team and implementation of standardised systems and processes;
• Portfolio optimisation through the upgrade of centres and divestment of poor performers;
• Increased focus on delivering curriculum activities, and
• Refined marketing approach to capitalise on growing business momentum and word-of-mouth recommendations.

Exit

Affinity Education Group was acquired by Quadrant Private Equity in September 2021, providing a full exit for Anchorage and for PIP.