Commercial childcare failures rise as G8 Education faces takeover offer

G8 Education’s board welcomed a 26¢-a-share indicative offer from Majority Capital Partners, a private equity firm set up this year by Vidhur Rangaswamy and backed by investors including Will Vicars. The offer values the group at less than $200 million; its 26¢ a share compares with a share price as high as $1.40 last year. Shares more than doubled on the news.

The operator’s struggles reflect a market rocked by falling fertility rates, rising costs and rising standards of care demanded by customers following sex abuse scandals that have hit commercial providers particularly hard. G8 has suspended 40 underperforming centres that are not expected to reopen.

Across the sector, the list of collapses is growing fast. Shared Beginnings childcare went into administration after its owners, ASX-listed private lender Finexia, called in administrators; Finexia had been lumbered with the centres last year through its role as a lender to Genius childcare when it collapsed. Edge Early Learning, a private-equity-owned chain, entered voluntary administration in August with 70 centres; six centres were closed in South Australia and Victoria last week. Not-for-profit Goodstart had agreed to acquire them but the centres failed to pass due diligence.

Data extracted from the corporate regulator by For Purpose Investment Partners shows 58 childcare centres failed between July 1 and October 11 this year, compared with 35 in the entire 2025-26 financial year. Of the 210 childcare companies that have failed since 2021, only four were not privately owned. Since 2022, more than 90 per cent of new centre approvals were for privately owned centres.

Dr Caroline Croser-Barlow, chief executive of childcare think tank The Front Project, said landlords had been dictating terms, leaving operators to bear all the business risk. “Right now, how big a centre is – and where it’s located – comes down to what it costs to build. Children’s needs barely come into it,” she said. She noted that a handful of unviable leases can drag down a whole provider, and because leases follow the business when sold, the damage can last for years. The Front Project is among those calling for an independent commission to oversee the sector.

Georgie Dent, head of advocacy group The Parenthood, said the current funding model had driven significant investment but without management or oversight of where services are needed. She said the model had led to “really significant closures”. The Parenthood says childcare provision should be viewed through the same lens as school provision and based on community needs, not market forces.

Former Macquarie executive Michael Traill, chair of For Purpose Investment Partners, said ownership was an important factor in sustainable quality care. His “patient capital” model calls for superannuation funds to play a bigger role and take a long-term view. He also pointed to the split between ownership and operation as an issue to address, calling it a “natural tension” between landlords seeking to maximise development profits and rent and operators for whom rent is a significant cost. “There’s a different skill set in developing and building childcare centres but, certainly, our view would be it’s easy to have alignment where you’ve got ownership of that under one entity,” he said.