Embark Education confirms $18.2m capital raise to fund acquisitions

ASX listed early childhood education and care provider Embark Education Group has confirmed it has raised $18.2 million to fund acquisitions by way of an institutional placement to investors. 

The offer was conducted at A$0.76 per share, a 5 per cent discount to the closing price prior to the shares entering a trading halt on 11 October 2024. The proceeds will be used to fund the acquisition of eight ECEC centres along with transaction costs. 

Embark anticipates settling two tranches of acquisitions in the foreseeable future, with the first, a group of six centres expected to settle before the end of the month, and the second, a group of two centres expected to settle by mid December 2024. 

The second tranche has recently been agreed with a purchase price of $4.3 million for $1.2 million of earnings before interest, tax, depreciation and amortisation (EBITDA) representing a multiple of 3.58x.

Post the placement the Group will have $28.2 million of cash on the balance sheet. 

Embark provides positive trading update as earnings top prior year

Embark also issued an upbeat trading statement citing positive market conditions, including occupancy, and overall profitability ahead of the prior period.  

Occupancy, despite being slightly below exceptionally strong 2023 levels, remained buoyant overall, with any weakness in the portfolio attributed to work force supply challenges which the Company expects to ameliorate once the Government funded “worker retention payment” kicks off in December. 

Notably, Embark also highlighted it has secured a new Bank Facility confirmed for $25 million (undrawn at 14 October 2024) and a $8.6m cash balance post transaction which place it in a solid position to pursue further accretive acquisition opportunities.

By year ended the Group expects to have a network of 38 ECEC centres.