Nido confirms first acquisitions with four centres purchased from incubator pipeline

ASX listed early learning provider Nido Education has confirmed the acquisition of four new early childhood education and care (ECEC) centres from its greenfield incubation pipeline for a cost of $11.85 million. 

The announcement marks the first acquisitions since Nido listed on the ASX and is consistent with comments made in its half year results that four centres were on track to reach acquisition hurdles of 80 per cent ahead of forecasts and transition into the Group. 

Nido will pay $11.85 million for the four businesses which are expected to earn earnings before interest and tax of $2.6 million next year, reflecting a forward acquisition multiple of around 4.5x. 

Notably, Nido has also confirmed that the acquisitions have been somewhat de-risked through an earnout and claw-back of up to 10% of the acquisition investment based on the earnings for the first 12- months of Nido’s ownership.

From a ramp up perspective the new centres achieved hurdle occupancy relatively quickly with the oldest having been open 15 months and the newest just 11 months and from a network perspective, two of which are located in Victoria and two in Western Australia, will take the overall Group size to 56 centres nationally. 

Nido sourced the acquisitions from three different vendors, one of which is the Group’s primary incubator NAED. 

Looking ahead it is understood that no additional centres will be acquired in 2024 however, expectations are that a portion of the remaining nine across Nido’s incubator pipeline will be acquired by the Group next year.