Finexia shifts early learning asset strategy after sale talks end and Genius-linked centres enter administration

Finexia Financial Group has confirmed it will retain management of 11 early learning services linked to defaulted childcare finance loans, following the collapse of a proposed sale to a consortium that included its former CEO. The move comes alongside a broader strategic review of the company’s credit policies and early learning asset portfolio.

In a market update, Finexia Financial Group (ASX: FNX) announced it had ceased negotiations to divest Creative Capital Group (CCG) and associated childcare management rights. The planned transaction, first flagged in February, would have transferred operational control to an investor group including former CEO Patrick Bell.

The sale was expected to be a material change affecting the Finexia Childcare Finance Trust (FCFT). However, the company has now confirmed its focus will be on asset recovery rather than a transfer of management rights.

The revised strategy centres on 11 early learning services held as collateral against $21.2 million in loans issued to Genius Education Group-affiliated entities Vertical 4 Pty Ltd and Abacus 49 Pty Ltd. Both companies are in external administration, with Finexia holding priority secured creditor status.

Administrator Alan Walker of WLP Restructuring was appointed after due diligence raised concerns. Finexia reports it has been working with the administrator to stabilise operations at the affected services.

The company noted that while the situation has caused operational disruption, revenue remains broadly consistent with last year and there has been “no material impact” on core financial results.

Originally, 27 services were linked to the Genius-related loans. This has been reduced to the 11 most viable centres, now transferred to a new special purpose vehicle, Shared Beginnings, created to manage the businesses and oversee debt recovery for investors in FCFT and the Finexia Childcare Income Fund (FCIF).

Finexia has appointed sector-experienced operator Early Learning Management (ELM) to run the services. ELM took operational control on 2 June 2025, with formal transfer subject to lease assignments and regulatory approvals. The operator will focus on improving profitability ahead of staged divestment.

To strengthen its position, Finexia has secured an additional $6 million in collateral in the form of fully paid shares in ASX-listed Mayfield Childcare, bringing total pooled security to $35.1 million. Genius Education Group remains Mayfield’s largest shareholder.

Finexia has confirmed internal and external investigations are underway into the Genius loan arrangements and potential regulatory breaches within FCIF. Preliminary findings from the external legal review have identified two compliance breaches, one of which has been self-reported to ASIC. Both are either resolved or in the process of remediation.

Independent director Robert Spano is leading a strategic review of the group’s credit policies, with a stated intention to expand lending activities to include childcare property assets as well as operational finance.

The company is also assessing the structure and valuation of its off-balance-sheet holiday accommodation fund, Stayco, with consolidation into Finexia’s statements under consideration.

While the Genius administration has reduced the number of centres linked to Finexia’s childcare finance products, the group maintains it is committed to providing capital to early learning operators. Its revised approach, combining short-term operational stabilisation with a longer-term divestment strategy, may influence how financial institutions structure sector-specific lending in future.

Based on reporting from Business News Australia and public market disclosures by Finexia Financial Group.