INVESTOR UPDATES

An “Essential Service” with massive government support backs the investment

• With universal childcare forming one of the new Federal Labor Government's election promises, from July 2023 more than 90% of fees will be covered for lower income workers.
• The Australian Government is reviewing the current early childhood system, with the aim of a universal 90% childcare subsidy for all families with no upper income limit.
• The largest single initiative in this year’s Budget is making childcare cheaper. Childcare subsidy rates will increase and will be made available for families earning up to $A530,000 pa. Around 96% of families will be better off with the new subsidies while the remaining 4% will be no worse off. The aim is to incentivise female labour force participation and remove the disincentive for second income earners to work reduced hours. The cost to the Budget is expected to be $A4.7bn over four years.

Industry revenue and demand for places is growing strongly

• The Industry is forecast to outgrow the wider economy for the next 10 years.
• The Industry has nearly $15b in Revenue and is growing at >3% pa.
• Demand for places is very strong, with 5% growth pa for long day care attendance (pre COVID-19).

Highly profitable, fragmented industry with increasing growth

• Most of the operators are smaller and have limited access to pools of inexpensive capital. The industry's largest four players are expected to account for less than 30% of revenue in 2022-23.
• Individual and medium sized operators are projected to increase profitability by targeting premium centres and/or by operating in locations with favourable socio-demographic factors. 

• Loans are fully secured by registered 1st mortgage over the leasehold childcare business with guarantees from directors.
• Conservative Loan to Value Ratio with Major Bank quality valuations.
• The finance team has more than 20 years of lending experience.
• Credit Committee includes an external Industry specialist.
• Once a centre has been traded-up, Major Banks will provide alternative loans on good terms.

Click here to meet the Finexia Team