Nurseries are usually the place you will look to leave your child if you have work or have other commitments. There are alternatives such as a child minder or family and friends. But nurseries seems to be the choice for many families as they can drop their children off before work and collect them after. But who else is finding nurseries a safe place?
Nurseries are attracting the eyes of investors who see the long-term regular income of working families needing childcare a safe option. The nursery market is worth a staggering £30 billion in the UK alone and has grown in value more so over the last few years. Between 2007 and 2012 the market increased by 16.1 per cent and that figure is set to rise as more mothers return to work after having a baby.
Andrew Nicholson, M&A partner at KPMG (financial advisers), spoke of the incentives for investors.
He said: “The childcare market is fragmented and it is therefore appealing to private equity investors and pension funds looking to consolidate and build economies of scale.
“Another appealing facet, from a private equity investor’s perspective, is that the sector is highly regulated, which creates barriers to entry.”
Another aspect attracting investors to the market is the support that nurseries receive from the Government. The UK Government spends one of the highest amounts of money supporting pre-school children – a whopping £7 billion per year. The majority of the money is spent on the childcare voucher scheme which gives parents tax relief of childcare costs. Martin Lewis, a personal finance expert spoke of the benefits of the scheme.
He said: “Childcare vouchers can save many parents with kids aged up to 15 more than £1,000 a year on childcare. The key is they enable you to pay for childcare out of your pre-tax and National Insurance income. While this doesn’t sound much, the benefit is huge.”
Have you recently had a baby? Will you be returning to work after maternity leave and taking your child to a nursery?
