Evolve seeks up to $132.3 million in IPO to fund childcare acquisitions

Friday 14th November 2014

Evolve Education Group, which will be chaired by former Summerset Group boss Norah Barlow, is looking to raise $132.3 million of new capital in a dual listing on the ASX and NZX to fund its acquisition of childcare businesses.

The Auckland based business will issue 132.3 million new shares at $1 a piece, adding to the pre existing 8.1 million shares and giving it an indicative market capitalisation of $177.1 million, according to the prospectus lodged with the Companies Office. The newly formed company, set up in May by Greg Kern and Russell Daly of Queensland based Kern Group, will use the funds to acquire several New Zealand childcare businesses, including Lollipops Educare, the in-home childcare Porse Group, Wellington based I-Kids and Christchurch based Artemis Learning, and others, and pay off offer associated costs.

"Evolve Education is well positioned to benefit from offering both centre based and home based education and childcare, as we will have the capability to offer parents and caregivers the choice about the type of service in which they think their child will flourish," Barlow said in the offer document. "We will also look to leverage the collective expertise of the combined entities to promote and pursue best practice in early childhood education."

After the initial public offer, new shareholders will hold 75 percent of the company, while the Lollipop Educare vendors will hold a 20 percent stake while the Queensland based Hayes Knight Business Services will hold onto a 0.3 percent stake. Chair Barlow oversaw retirement village operator Summerset's listing on the NZX as its chief executive.

In the year ended March 31, 2015, which only covers three and a half months trading, the company is forecast a loss of $9.5 million on $29 million of sales, before turning to a profit of $16.6 million on sales of $136 million in the subsequent year.

Evolve follows the successful float of Australia’s Affinity Education Group which listed on the ASX in December 2013, raising A$75 million to buy 57 childcare centres and to list. AFE listed at A$1 per share and is now trading at A$1.25 despite reporting a half year loss of A$5 million compared to a A$2.6 million forecast profit in its prospectus. AFE's shareholders include Kern Group holding one third.

Evolve's broker firm offer opens Nov. 24 and runs through to Dec. 3, before a dual-listing on the ASX and NZX scheduled for Dec. 5.

BusinessDesk.co.nz

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