As childcare providers struggle to stay afloat, private equity firms have spotted an opportunity. With nothing in the way of financial regulation, there’s money to be made, finds Florence Wilkinson
manager until her workplace was purchased by a private equity firm. “It was my decision to leave,” she tells me. “When the nursery was bought out, I just didn’t feel that it was for me, the way they wanted to manage it.”
In an effort to turn the tide, the Government has just rolled out a flagship new scheme, which offers 15 hours of “for two-year-olds, extending to 30 hours for children aged nine months and above from September 2025. This came into effect yesterday. “If you work backwards from the returns that these private equity firms are expected to deliver investors,” Jitendra explains, “which is around 15 to 20 per cent, you can imagine that they will use a range of tactics and strategies to do that, such as keeping worker pay as low as they can, and increasing fees to parents as much as possible.” These profits, according to the JRF study, are around twice those made on average by non-private equity backed providers.
This is one way in which chains can outcompete smaller competitors: “It means they can poach people from independent nurseries, but from the conversations I’ve had, when those people actually get there they tend to find their experience isn’t better in terms of how they’re treated,” says Hardy. Kotecha draws parallels with other markets that have seen heavy private equity involvement. The Competition and Markets Authority recently launched an, for instance, after discovering pet owners may be significantly overpaying for treatments and medicines in a market where smaller providers are allegedly being pushed out of business by private equity-backed chains.
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