Foundation Early Learning flourishes amidst challenges, achieving significant growth and sale to Busy Bees.

Foundation Early Learning holds a national portfolio of 32 early learning centres across Australia. Amid strong market tailwinds, Fortitude first invested in Foundation in July 2014, and again in December 2014, with all proceeds directed towards business growth.


Our results

Amid rapid growth and fierce market competition, the business achieved significant revenue growth with our investment and management, before a successful sale to Busy Bees in June 2018, delivering a gross internal rate of return (IRR) of 6%.

64%

COMPOUND ANNUAL GROWTH RATE IN REVENUE

32

CENTRES DEVELOPED ACROSS AUSTRALIA

$36.1M

IN REVENUE UP FROM $13.4M AT ENTRY

CHALLENGES OVERCAME

  • Managing sustained growth as the business rapidly outpaced initial management capabilities.

  • Navigating through a fragmented industry that is experiencing increasing acquisition pricing and supply.

  • Introducing a new CEO to guide growth alongside capital and strategic support.

 

Investment reaso

ning

Our investment in Foundation was based on expected market tailwinds due to increasing workforce participation and bipartisan government funding. The industry was highly fragmented with a slate of lucrative acquisition opportunities, and Foundation, with its track record of operational and financial improvement, was poised to seize them.

 
 
 

OUTPERFORMING IN A DIFFICULT MARKET

Despite mounting industry competition, Foundation outperformed its listed peers, with a 6% IRR generated by the investment compared to a 39% fall in the average share price of listed comparable companies (G8 and Affinity) during our hold period.

 
 

GROWING CENTRE LEVEL EBITDA

With our support, the EBITDA at the centre level increased by a compound annual growth rate of 72%, rising from $2 million to $6 million at exit.

 
 
 

INTRODUCING STRONG SENIOR MANAGEMENT

Managing the rapid growth of the business was a key focus, made possible by the placement of a strong CEO and the provision of capital and strategic support.