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Pacific Equity Partners (PEP) has submitted a non-binding indicative offer for Partners Group’s Guardian Childcare and Education, initiating a thorough review of the $110 million-a-year business’s future prospects.
Street Talk reveals that PEP, a $11 billion buyout firm, was among the first-round bidders for Guardian by last week’s deadline, with advisory support from Stanton Road Partners. Although PEP already owns the school supplies provider Modern Star, this marks its initial foray into the childcare sector.
PEP’s bid coincides with Partners Group’s renewed efforts to sell Guardian, following delays caused by the Productivity Commission’s review of early childhood education and revised award pay levels for employees. Partners Group, which acquired Guardian (then Guardian Early Learning) from Navis Capital for $440 million in 2016, has enlisted Morgan Stanley to manage the sale, attracting interest primarily from financial sponsors rather than trade players.
In May, Guardian secured a two-year extension on approximately $500 million of borrowings, with existing lenders Commonwealth Bank, Macquarie, ICG, and Aware Super participating in the new facility.
Bidders are likely to use ASX-listed G8 Education (ASX:GEM), trading at about 13 times forward estimated price-to-earnings, as a benchmark. Guardian’s EBITDA for the year ending December 31 is expected to exceed $110 million, up from $80 million to $100 million in 2022.
Guardian operates 160 centers across Australia’s major cities, including Brisbane, Sydney, Canberra, Melbourne, and Adelaide, serving over 150,000 children.
Last year, Partners Group was an underbidder for the $600 million Cura Day Hospitals, which was acquired by Intermediate Capital Group. Partners Group’s 2022 sale of CWP Renewables to Andrew Forrest’s Squadron Energy for over $4 billion remains Australia’s largest renewables deal.
