Mon 10/11/2021 10:22 AM
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Direct lenders are chasing Kids Planet as the U.K. based nursery business prepares to launch to sale, sources said. A number of direct lenders including Ares are in talks with private equity groups to put together a debt package in excess of 6x aimed at fast-tracking Kids Planet’s growth.

The pre-school sector has historically been popular with direct lenders as nursery businesses can quickly scale up through bolt-on acquisitions and well-managed businesses can sustain highly leveraged balance sheets, sources said. Private equity buyers are attracted to the sector due to the lack of state funding in U.K. pre-school education and the subsequent strong demand for private education.

EY has been hired to sell Kids Planet off a pro-forma EBITDA of £15 million to £16 million. Kids Planet is majority owned by its founders and the British Growth Fund owns a minority stake. The early years education provider runs 82 nurseries across the North-West and Midlands of England.

Kids Planet reported a 57.5% year-over-year increase in revenue to £33.3 million in the year to March 31, 2020, due to an expansion of sites. In fiscal 2020, Kids Planet bought 19 operational settings in line with its expansion plans.

In January 2020, the company refinanced its existing facilities with original lender Barclays and new lender Clydesdale Bank. The new facilities comprise a £36.7 million bank term loan A maturing in 2023.

Following the Covid-19 outbreak, Kids Planet secured a £3 million CBILS loan in April 2020 to provide additional liquidity in an uncertain environment. The group also used the U.K. government’s furlough scheme to provide further liquidity support.

Management said the business faced severe disruption as a result of the pandemic, however, it returned to profitability from June 2020 onwards.

Ares declined to comment. EY did not respond to Reorg’s request for comment at the time of publication.

-- Lara Gibson
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